##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2006
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the transition period from to
 
 US Airways Group, Inc.
    
 America West Airlines, Inc.
    
 US Airways, Inc.
    
 
 
 þ o
  US Airways Group, Inc.
    
    Large accelerated filer
    
    o
    
    Accelerated filer
    
    þ
    
    Non-accelerated filer
    
    oAmerica West Airlines, Inc.
    
    Large accelerated filer
    
    o
    
    Accelerated filer
    
    o
    
    Non-accelerated filer
    
    þUS Airways, Inc.
    
    Large accelerated filer
    
    o
    
    Accelerated filer
    
    o
    
    Non-accelerated filer
    
    þ
  US Airways Group, Inc.
    
    Yes
    
    o
    
    No
    
    þAmerica West Airlines, Inc.
    
    Yes
    
    o
    
    No
    
    þUS Airways, Inc.
    
    Yes
    
    o
    
    No
    
    þ
  US Airways Group, Inc.
    
    Yes
    
    þ
    
    No
    
    oUS Airways, Inc.
    
    Yes
    
    þ
    
    No
    
    o




---



##### 



US Airways Group, Inc.
Form 10-Q
Quarterly Period Ended September 30, 2006
Table of Contents
 PagePart I.
    
    Financial InformationItem 1A.
    
    Condensed Consolidated Financial Statements of US Airways Group, Inc.Condensed Consolidated Statements of Operations
    
    
    5Condensed Consolidated Balance Sheets
    
    
    6Condensed Consolidated Statements of Cash Flows
    
    
    7Notes to the Condensed Consolidated Financial Statements
    
    
    8Item 1B.
    
    Condensed Consolidated Financial Statements of America West Airlines, Inc.Condensed Consolidated Statements of Operations
    
    
    21Condensed Consolidated Balance Sheets
    
    
    22Condensed Consolidated Statements of Cash Flows
    
    
    23Notes to the Condensed Consolidated Financial Statements
    
    
    24Item 1C.
    
    Condensed Financial Statements of US Airways, Inc.Condensed Statements of Operations
    
    
    32Condensed Balance Sheets
    
    
    33Condensed Statements of Cash Flows
    
    
    34Notes to the Condensed Financial Statements
    
    
    35Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    47Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    71Item 4.
    
    Controls and Procedures
    
    
    72Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    73Item 1A.
    
    Risk Factors
    
    
    75Item 6.
    
    Exhibits
    
    
    82Signatures
    
    
    
    
    83Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 31.3Exhibit 31.4Exhibit 31.5Exhibit 31.6Exhibit 32.1Exhibit 32.2Exhibit 32.3
  2




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##### Table of Contents



Note Concerning Forward-Looking Statements
  
    
    the impact of high fuel costs, significant disruptions in the supply of aircraft fuel and
further significant increases to fuel prices;
    
    our high level of fixed obligations and our ability to obtain and maintain financing for operations and other purposes;
    
    our ability to achieve the synergies anticipated as a result of the merger and to achieve those synergies in a timely manner;
    
    our ability to integrate the management, operations and labor groups of US Airways Group and America West Holdings;
    
    labor costs and relations with unionized employees generally and the impact and outcome of labor negotiations;
    
    the impact of global instability, including the current instability in the Middle East,
the continuing impact of the military presence in Iraq and Afghanistan and the terrorist
attacks of September 11, 2001 and the potential impact of future hostilities, terrorist
attacks, infectious disease outbreaks or other global events that affect travel behavior;
    
    reliance on automated systems and the impact of any failure or disruption of these systems;
    
    the impact of future significant operating losses;
    
    changes in prevailing interest rates;
    
    our ability to obtain and maintain commercially reasonable terms with vendors and service
providers and our reliance on those vendors and service providers;
    
    security-related and insurance costs;
    
    changes in government legislation and regulation;
    
    our ability to use pre-merger NOLs and certain other tax attributes;
    
    competitive practices in the industry, including significant fare restructuring
activities, capacity reductions and in court or out of court restructuring by major
airlines;
    
    continued existence of prepetition liabilities;
    
    interruptions or disruptions in service at one or more of our hub airports;
 3




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##### Table of Contents




    
    weather conditions;
    
    our ability to maintain adequate liquidity;
    
    our ability to maintain contracts that are critical to our operations;
    
    our ability to operate pursuant to the terms of our financing facilities (particularly the financial covenants);
    
    our ability to attract and retain customers;
    
    the cyclical nature of the airline industry;
    
    our ability to attract and retain qualified personnel;
    
    economic conditions; and
    
    other risks and uncertainties listed from time to time in our reports to the Securities and Exchange Commission.
  
 Part I. Financial Information
  4




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##### Table of Contents



Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Operating RevenuesMainline passenger
    
    $
    2,052
    
    
    $
    704
    
    
    $
    6,048
    
    
    $
    1,939Express passenger
    
    
    703
    
    
    
    155
    
    
    
    2,095
    
    
    
    388Cargo
    
    
    40
    
    
    
    9
    
    
    
    114
    
    
    
    25Other
    
    
    173
    
    
    
    61
    
    
    
    514
    
    
    
    157Total operating revenues
    
    
    2,968
    
    
    
    929
    
    
    
    8,771
    
    
    
    2,509Operating ExpensesAircraft fuel and related taxes
    
    
    719
    
    
    
    252
    
    
    
    1,943
    
    
    
    611Loss (gain) on fuel hedging instruments, net
    
    
    88
    
    
    
    (56
    )
    
    
    32
    
    
    
    (124
    )Salaries and related costs
    
    
    529
    
    
    
    193
    
    
    
    1,574
    
    
    
    542Express expenses
    
    
    653
    
    
    
    168
    
    
    
    1,930
    
    
    
    414Aircraft rent
    
    
    181
    
    
    
    88
    
    
    
    546
    
    
    
    246Aircraft maintenance
    
    
    142
    
    
    
    76
    
    
    
    432
    
    
    
    196Other rent and landing fees
    
    
    146
    
    
    
    50
    
    
    
    432
    
    
    
    137Selling expenses
    
    
    120
    
    
    
    48
    
    
    
    348
    
    
    
    129Special items, net
    
    
    27
    
    
    
    84
    
    
    
    18
    
    
    
    85Depreciation and amortization
    
    
    42
    
    
    
    16
    
    
    
    132
    
    
    
    39Other
    
    
    305
    
    
    
    93
    
    
    
    901
    
    
    
    259Total operating expenses
    
    
    2,952
    
    
    
    1,012
    
    
    
    8,288
    
    
    
    2,534Operating income (loss)
    
    
    16
    
    
    
    (83
    )
    
    
    483
    
    
    
    (25
    )Nonoperating income (expense)Interest income
    
    
    45
    
    
    
    4
    
    
    
    111
    
    
    
    8Interest expense, net
    
    
    (74
    )
    
    
    (21
    )
    
    
    (221
    )
    
    
    (60
    )Other, net
    
    
    (4
    )
    
    
    1
    
    
    
    (14
    )
    
    
    3Nonoperating expense, net
    
    
    (33
    )
    
    
    (16
    )
    
    
    (124
    )
    
    
    (49
    )Income (loss) before income taxes and cumulative effect of change in
accounting principle
    
    
    (17
    )
    
    
    (99
    )
    
    
    359
    
    
    
    (74
    )Income tax provision
    
    
    61
    
    
    
    
    
    
    
    68
    
    
    
    Income (loss) before cumulative effect of change in accounting principle
    
    
    (78
    )
    
    
    (99
    )
    
    
    291
    
    
    
    (74
    )Cumulative effect of change in accounting principle, net
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (202
    )Net income (loss)
    
    $
    (78
    )
    
    $
    (99
    )
    
    $
    292
    
    
    $
    (276
    )Unaudited pro forma net income (loss) assuming change in method of
accounting was applied retroactively (Note 1)
    
    $
    (78
    )
    
    $
    (99
    )
    
    $
    291
    
    
    $
    (74
    )Earnings (loss) per common share:Basic:Before cumulative effect of change in accounting principle
    
    $
    (0.88
    )
    
    $
    (5.74
    )
    
    $
    3.41
    
    
    $
    (4.70
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    (12.84
    )Net income (loss) per common share
    
    
    (0.88
    )
    
    
    (5.74
    )
    
    
    3.42
    
    
    
    (17.54
    )Diluted:Before cumulative effect of change in accounting principle
    
    $
    (0.88
    )
    
    $
    (5.74
    )
    
    $
    3.20
    
    
    $
    (4.70
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    (12.84
    )Net income (loss) per common share
    
    
    (0.88
    )
    
    
    (5.74
    )
    
    
    3.21
    
    
    
    (17.54
    )Shares used for computation (in thousands):Basic
    
    
    88,212
    
    
    
    17,262
    
    
    
    85,286
    
    
    
    15,737Diluted
    
    
    88,212
    
    
    
    17,262
    
    
    
    94,474
    
    
    
    15,737
  5




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September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,154
    
    
    $
    1,125Short-term investments
    
    
    1,162
    
    
    
    452Restricted cash
    
    
    1
    
    
    
    8Accounts receivable, net
    
    
    394
    
    
    
    353Materials and supplies, net
    
    
    231
    
    
    
    229Prepaid expenses and other
    
    
    469
    
    
    
    392Total current assets
    
    
    3,411
    
    
    
    2,559Property and equipmentFlight equipment
    
    
    1,982
    
    
    
    1,920Ground property and equipment
    
    
    570
    
    
    
    532Less accumulated depreciation and amortization
    
    
    (537
    )
    
    
    (431
    )2,015
    
    
    
    2,021Equipment purchase deposits
    
    
    48
    
    
    
    43Total property and equipment
    
    
    2,063
    
    
    
    2,064Other assetsGoodwill
    
    
    655
    
    
    
    732Other intangibles, net
    
    
    560
    
    
    
    583Restricted cash
    
    
    637
    
    
    
    792Other assets, net
    
    
    250
    
    
    
    234Total other assets
    
    
    2,102
    
    
    
    2,341Total assets
    
    $
    7,576
    
    
    $
    6,964LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    91
    
    
    $
    211Accounts payable
    
    
    543
    
    
    
    457Air traffic liability
    
    
    875
    
    
    
    788Accrued compensation and vacation
    
    
    217
    
    
    
    210Accrued taxes
    
    
    165
    
    
    
    146Other accrued expenses
    
    
    854
    
    
    
    847Total current liabilities
    
    
    2,745
    
    
    
    2,659Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    2,879
    
    
    
    2,749Deferred gains and credits
    
    
    217
    
    
    
    254Employee benefit liabilities and other
    
    
    843
    
    
    
    882Total noncurrent liabilities and deferred credits
    
    
    3,939
    
    
    
    3,885Stockholders equityCommon stock, $0.01 par value; 200,000,000 shares authorized, 88,647,437 shares
outstanding at September 30, 2006; 81,668,989 shares outstanding at December 31, 2005
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    1,438
    
    
    
    1,258Accumulated deficit
    
    
    (534
    )
    
    
    (826
    )Treasury stock, common stock, 413,993 shares at September 30, 2006 and December 31, 2005
    
    
    (13
    )
    
    
    (13
    )Total stockholders equity
    
    
    892
    
    
    
    420Total liabilities and stockholders equity
    
    $
    7,576
    
    
    $
    6,964
  6




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##### Table of Contents



Nine Months Ended September 30,2006
    
    
    2005Net cash provided by operating activities
    
    $
    477
    
    
    $
    211Cash flows from investing activitiesPurchases of property and equipment
    
    
    (139
    )
    
    
    (148
    )Purchase of short-term investments
    
    
    (1,685
    )
    
    
    (316
    )Sales of short-term investments
    
    
    975
    
    
    
    304Decrease (increase) in long-term restricted cash
    
    
    157
    
    
    
    (22
    )Cash acquired as part of acquisition
    
    
    
    
    
    
    279Costs incurred as part of acquisition
    
    
    
    
    
    
    (21
    )Proceeds from disposition of assets
    
    
    4
    
    
    
    74Increase in equipment deposits
    
    
    (8
    )
    
    
    Net cash provided by (used for) investing activities
    
    
    (696
    )
    
    
    150Cash flows from financing activitiesRepayments of debt
    
    
    (1,165
    )
    
    
    (306
    )Proceeds from issuance of debt
    
    
    1,375
    
    
    
    314Proceeds from issuance of common stock, net
    
    
    38
    
    
    
    694Other
    
    
    
    
    
    
    (2
    )Net cash provided by (used for) financing activities
    
    
    248
    
    
    
    700Net increase in cash and cash equivalents
    
    
    29
    
    
    
    1,061Cash and cash equivalents at beginning of period
    
    
    1,125
    
    
    
    149Cash and cash equivalents at end of period
    
    $
    1,154
    
    
    $
    1,210Non-cash investing and financing activitiesReclassification of investments in debt securities to short-term investments
    
    $
    
    
    
    $
    30Notes payable issued under aircraft purchase agreement
    
    
    
    
    
    
    9Notes payable cancelled under aircraft purchase agreement
    
    
    4
    
    
    
    12Conversion of 7.5% Convertible Senior Notes, net of discount of $17 million to common stock
    
    
    95
    
    
    
    Conversion of 7% Senior Convertible Notes
    
    
    21
    
    
    
    Equipment purchases financed by capital leases
    
    
    3
    
    
    
    Common shares issued in acquisition of business
    
    
    
    
    
    
    96Supplemental informationCash paid for interest, net of amounts capitalized
    
    $
    205
    
    
    $
    28Income taxes paid
    
    
    6
    
    
    
    
  7




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US Airways Group, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of presentation and summary of significant accounting policies
       Frequent Traveler Program
  8




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Recent Accounting Pronouncements
     9




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2. Special items
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Airbus restructuring (a)
    
    $
    
    
    
    $
    57
    
    
    $
    (90
    )
    
    $
    57Merger related transition expenses (b)
    
    
    27
    
    
    
    
    
    
    
    108
    
    
    
    Sale leaseback transactions (c)
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Other (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Special items, net
    
    $
    27
    
    
    $
    84
    
    
    $
    18
    
    
    $
    85
 
 (a)
    
    In connection with the merger and the Airbus Memorandum of Understanding (Airbus MOU)
executed between US Airways Group, US Airways and AWA, certain aircraft firm orders were
restructured. In connection with that restructuring, US Airways Group and America West
Holdings were required to pay restructuring fees totaling $89 million by means of set-off
against existing equipment deposits of US Airways and AWA held by Airbus of $39 million and
$50 million, respectively. Also in connection with the Airbus MOU, US Airways and AWA entered
into two loan agreements with commitments of up to $161 million and $89 million. As described
in further detail in Note 5, on March 31, 2006, the outstanding principal and accrued interest
on the $89 million loan was forgiven upon repayment in full of the $161 million loan in
accordance with the terms of the Airbus loans. As a result, the Company recognized a gain
associated with the return of these equipment deposits upon forgiveness of the loan totaling
$90 million, consisting of the $89 million in equipment deposits and accrued interest of $1
million.(b)
    
    In connection with the merger, the Company incurred $27 million of transition and merger
integration costs in the third quarter of 2006. These items included $11 million in personnel
costs primarily for severance, retention payments and stock awards; $1 million of aircraft
livery costs; $13 million in professional and technical fees, including continuing
professional fees associated with US Airways bankruptcy proceedings; $1 million in employee
moving expenses and $1 million of transition-related sales and marketing program expenses.In connection with the merger, the Company incurred $108 million of transition and merger
integration costs in the first nine months of 2006. These items included $39 million in personnel
costs primarily for severance, retention payments and stock awards; $11 million of costs
associated with the integration of the AWA FlightFund and US Airways Dividend Miles frequent
traveler programs; $9 million in merger related aircraft lease return expenses; $10 million of
aircraft livery cost; $29 million in professional and technical fees; including continuing
professional fees associated with US Airways bankruptcy proceedings, $6 million in employee
moving expenses; $2 million of transition-related sales and marketing program expenses; $1
million in system integration expenses and $1 million in other expenses. 10




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##### Table of Contents



(c)
    
    In the third quarter of 2005, a $27 million loss was incurred related to the sale-leaseback
of six Boeing 737-300 aircraft and two Boeing 757 aircraft.(d)
    
    In August of 2004, AWA entered into a definitive agreement to return six Boeing 737-200
aircraft. Five of the aircraft were returned in 2004 and one was returned in January 2005.
In the first quarter of 2005 AWA recorded $1 million in special charges related to the final
Boeing 737-200 aircraft. 3. Earnings (loss) per share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Basic earnings (loss) per share:Income (loss) before cumulative effect of change in
accounting principle
    
    $
    (78
    )
    
    $
    (99
    )
    
    $
    291
    
    
    $
    (74
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (202
    )Net income (loss)
    
    $
    (78
    )
    
    $
    (99
    )
    
    $
    292
    
    
    $
    (276
    )Weighted average common shares outstanding (in thousands)
    
    
    88,212
    
    
    
    17,262
    
    
    
    85,286
    
    
    
    15,737Basic earnings (loss) per share:Before cumulative effect of change in accounting principle
    
    $
    (0.88
    )
    
    $
    (5.74
    )
    
    $
    3.41
    
    
    $
    (4.70
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    (12.84
    )Net earnings (loss) per share
    
    $
    (0.88
    )
    
    $
    (5.74
    )
    
    $
    3.42
    
    
    $
    (17.54
    )Diluted earnings (loss) per share:Income (loss) before cumulative effect of change in
accounting principle
    
    $
    (78
    )
    
    $
    (99
    )
    
    $
    291
    
    
    $
    (74
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (202
    )Net income (loss)
    
    
    (78
    )
    
    
    (99
    )
    
    
    292
    
    
    
    (276
    )Interest expense on 7.5% convertible senior notes
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    Interest expense on 7.0% senior convertible notes
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    Income (loss) for purposes of computing diluted net
income (loss) per share
    
    $
    (78
    )
    
    $
    (99
    )
    
    $
    303
    
    
    $
    (276
    )Share computation (in thousands):Weighted average common shares outstanding
    
    
    88,212
    
    
    
    17,262
    
    
    
    85,286
    
    
    
    15,737Dilutive effect of stock awards and warrants
    
    
    
    
    
    
    
    
    
    
    2,085
    
    
    
    Assumed conversion of 7.5% convertible senior notes
    
    
    
    
    
    
    
    
    
    
    1,406
    
    
    
    Assumed conversion of 7.0% senior convertible notes
    
    
    
    
    
    
    
    
    
    
    5,697
    
    
    
    Weighted average common shares outstanding as adjusted
    
    
    88,212
    
    
    
    17,262
    
    
    
    94,474
    
    
    
    15,737Diluted earnings (loss) per share:Before cumulative effect of change in accounting principle
    
    $
    (0.88
    )
    
    $
    (5.74
    )
    
    $
    3.20
    
    
    $
    (4.70
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    (12.84
    )Earnings (loss) per share
    
    $
    (0.88
    )
    
    $
    (5.74
    )
    
    $
    3.21
    
    
    $
    (17.54
    )
 11




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Three Months Ended September 30,
    
    Nine Months Ended September 30,2006
    
    2005
    
    2006
    
    20057.5% convertible senior notes
    
    
    
    
    
    
    3,860
    
    
    
    
    
    
    
    3,8607.25% convertible senior notes
    
    
    
    
    
    
    4,032
    
    
    
    
    
    
    
    4,0577.0 % convertible senior notes
    
    
    5,172
    
    
    
    259
    
    
    
    
    
    
    
    87
 12




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##### Table of Contents



4. Stock options (Adoption of SFAS 123R)
     Three Months
    
    
    Nine MonthsEnded September
    
    
    Ended September30, 2005
    
    
    30, 2005Net loss as reported
    
    $
    (99
    )
    
    $
    (276
    )Stock-based compensation determined under the fair-value based method
    
    
    (7
    )
    
    
    (9
    )Pro forma net loss
    
    $
    (106
    )
    
    $
    (285
    )Loss per common shareBasic  as reported
    
    $
    (5.74
    )
    
    $
    (17.54
    )Basic  pro forma
    
    
    (6.14
    )
    
    
    (18.11
    )Diluted  as reported
    
    
    (5.74
    )
    
    
    (17.54
    )Diluted  pro forma
    
    
    (6.14
    )
    
    
    (18.11
    )
 Restricted Stock Unit Awards 
 13




---



##### Table of Contents



WeightedNumber of
    
    
    average grant-2005
Equity Incentive Plan
    
    shares
    
    
    date fair valueNonvested balances at January 1, 2006
    
    
    687
    
    
    $
    26.17Granted
    
    
    254
    
    
    
    38.55Vested and released
    
    
    (24
    )
    
    
    42.89Forfeited
    
    
    (32
    )
    
    
    24.64Nonvested balance at September 30, 2006
    
    
    885
    
    
    $
    29.69
  Stock Options and Stock Appreciation Rights 
  WeightedaverageStock
    
    Weighted
    
    remaining
    
    Aggregateoptions
    
    average
    
    contractual term
    
    intrinsic valueand SARs
    
    exercise price
    
    (years)
    
    (in millions)1994
Incentive Equity PlanBalance at January 1, 2006
    
    
    1,267
    
    
    $
    38.28Granted
    
    
    
    
    
    
    Exercised
    
    
    (391
    )
    
    
    22.62Forfeited
    
    
    
    
    
    
    Expired
    
    
    (62
    )
    
    
    50.96Balance at September 30, 2006
    
    
    814
    
    
    $
    44.83
    
    
    
    2.76
    
    
    $
    4Exercisable at September 30, 2006
    
    
    814
    
    
    $
    44.83
    
    
    
    2.76
    
    
    
    42002
Incentive Equity PlanBalance at January 1, 2006
    
    
    2,048
    
    
    $
    16.98Granted
    
    
    
    
    
    
    Exercised
    
    
    (1,171
    )
    
    
    15.90Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Balance at September 30, 2006
    
    
    877
    
    
    $
    18.42
    
    
    
    7.22
    
    
    $
    23Exercisable at September 30, 2006
    
    
    671
    
    
    $
    17.64
    
    
    
    6.72
    
    
    
    182005
Equity Incentive PlanBalance at January 1, 2006
    
    
    1,973
    
    
    $
    23.15Granted
    
    
    1,096
    
    
    
    39.09Exercised
    
    
    (52
    )
    
    
    19.30Forfeited
    
    
    (65
    )
    
    
    29.64Expired
    
    
    
    
    
    
    Balance at September 30, 2006
    
    
    2,952
    
    
    $
    28.99
    
    
    
    8.78
    
    
    $
    46Exercisable at September 30, 2006
    
    
    259
    
    
    $
    27.66
    
    
    
    4.04
    
    
    
    4
  14




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##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Weighted average fair value
    
    $
    18.06
    
    
    $
    8.84
    
    
    $
    16.26
    
    
    $
    7.65Risk free interest rate
    
    
    4.8
    %
    
    
    3.4
    %
    
    
    4.8
    %
    
    
    2.3
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected life
    
    3.0 years
    
    
    4.0 years
    
    
    2.9 years
    
    
    4.0 yearsVolatility
    
    
    57
    %
    
    
    54
    %
    
    
    58
    %
    
    
    54
    %
   Agreements with ALPA 
  Risk free interest rate
    
    
    4.4
    %Expected dividend yield
    
    
    
    %Contractual term
    
    5.0 yearsVolatility
    
    
    69.8
    %
  15




---



##### Table of Contents



5. Debt
  September 30,
    
    
    December 31,2006
    
    
    2005SecuredGeneral
Electric Capital Corporation loan, variable interest rate of 8.99%, interest only payments until due on March 31, 2011
    
    $
    1,250
    
    
    $
    AWA Citibank Loan (former AWA ATSB Loan)
    
    
    
    
    
    
    250GECC term loan
    
    
    
    
    
    
    111Senior secured discount notes, variable interest rate 9.39%, installments due 2005 through 2009
    
    
    34
    
    
    
    34Airbus Loans
    
    
    
    
    
    
    186Equipment
notes payable, variable interest rates of 6.89% to 9.82%
    
    
    1,222
    
    
    
    1,240US Airways Citibank Loan (formerly US Airways ATSB Loan)
    
    
    
    
    
    
    551Slot Financing, interest rate of 8%, installments due through 2015
    
    
    47
    
    
    
    50Capital lease obligations, interest rate of 8%, installments due through 2021
    
    
    41
    
    
    
    46GE Credit Facility, variable interest rate of 9.75%, installments due 2006 to 2010
    
    
    21
    
    
    
    28Capital Lease Obligations, computer software, installments due through 2008
    
    
    3
    
    
    
    2,618
    
    
    
    2,496Unsecured7% senior convertible notes, interest only payments until due in 2020
    
    
    122
    
    
    
    1447.5% convertible senior notes, interest only payments until due in 2009
    
    
    
    
    
    
    112Equipment notes payable
    
    
    
    
    
    
    4Industrial development bonds, fixed interest rate of 6.3% due 2023
    
    
    29
    
    
    
    29State loan, variable
    
    
    
    
    
    
    1Juniper prepaid miles, variable interest rate of 10.08%, interest only payments until January 2008
    
    
    325
    
    
    
    325Note payable to Pension Benefit Guaranty Corporation, interest rate of 6%, interest only payments
until due in 2012
    
    
    10
    
    
    
    10486
    
    
    
    625Total long-term debt and capital lease obligations
    
    
    3,104
    
    
    
    3,121Less: Unamortized discount on debt
    
    
    (134
    )
    
    
    (161
    )Current maturities
    
    
    (91
    )
    
    
    (211
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    2,879
    
    
    $
    2,749
 Refinancing Transaction 
  16




---



##### Table of Contents




    
    The amended and restated US Airways and AWA loans entered into on September 27, 2005 that
had previously been guaranteed by the ATSB. On October 19, 2005, $777 million of the loans,
of which $752 million had been guaranteed by the ATSB, was sold by the lenders by order of
the ATSB to 13 fixed income investors, removing the ATSB guarantee. At the time of repayment
of these loans on March 31, 2006, the total outstanding balance of the loans was $801
million, of which $551 million was outstanding under the US Airways loan and $250 million was
outstanding under the AWA loan. Proceeds were also used to pay $15 million of accrued
interest and fees on the US Airways loan, and $8 million of accrued interest and $5 million
of prepayment penalty on the AWA loan.
    
    The $161 million loan entered into as of September 27, 2005 between US Airways and AWA and
Airbus Financial Services, for which US Airways Group was the guarantor. At the time of
repayment on March 31, 2006, the outstanding balance of the loan was $161 million. US Airways
and AWA also had an $89 million loan from Airbus Financial Services entered into as of
September 27, 2005. In accordance with the terms of the loan agreements, the outstanding
principal amount of the $89 million loan was to be forgiven in writing on the earlier of
December 31, 2010 or the date that the outstanding principal amount of, accrued interest on,
and all other amounts due under the Airbus $161 million loan were paid in full, provided that
the Company complies with the delivery schedule for certain Airbus aircraft. As a result of
the prepayment of the $161 million loan on March 31, 2006, the $89 million loan agreement was
terminated and the $89 million loan, of which $89 million was outstanding, was forgiven along
with $1 million in accrued interest.
    
    Two loans provided by GECC to AWA pursuant to loan agreements entered into as of September
3, 2004 referred to as the Spare Parts Facility and the Engines Facility. At the time of
repayment, the principal amounts outstanding under the Spare Parts Facility and the Engines
Facility were $76 million and $34 million, respectively. Proceeds were also used to pay $1
million of accrued interest and $1 million of prepayment penalties on these two GECC loans.
  Conversion of 7.5% Convertible Senior Notes due 2009 
 Conversion of 7% Senior Convertible Notes due 2020
 17




---



##### Table of Contents



6. Purchase accounting
 (a) Purchase price allocation
   Goodwill reported as of December 31, 2005
    
    $
    732Utilization of pre-merger NOL
    
    
    (59
    )Materials and supplies, net
    
    
    40Accounts receivable
    
    
    (22
    )Other assets
    
    
    (22
    )Other accrued expenses
    
    
    (12
    )Property and equipment
    
    
    6Long-term debt
    
    
    (6
    )Accrued compensation and vacation
    
    
    (4
    )Non current employee benefits and other
    
    
    4Accrued taxes
    
    
    (2
    )Accounts payable
    
    
    (1
    )Other intangibles, net
    
    
    1Goodwill reported as of September 30, 2006
    
    $
    655
  (b) Pro forma information
  18




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2005
    
    
    September 30, 2005Operating revenues
    
    $
    2,717
    
    
    $
    7,867Operating expenses
    
    
    2,800
    
    
    
    8,031Operating income (loss)
    
    
    (83
    )
    
    
    (164
    )Net loss
    
    $
    (164
    )
    
    $
    (623
    )Basic and diluted loss per share
    
    $
    (2.36
    )
    
    $
    (9.17
    )Basic and diluted shares (in thousands)
    
    
    69,473
    
    
    
    67,948
 7. Income Taxes
     19




---



##### Table of Contents



8. Employee benefit plans
   Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2006Service cost
    
    $
    
    
    
    $
    1Interest cost
    
    
    
    
    
    
    2Expected return on plan assets
    
    
    (1
    )
    
    
    (2
    )Total periodic cost
    
    $
    (1
    )
    
    $
    1
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2006Service cost
    
    $
    1
    
    
    $
    3Interest cost
    
    
    3
    
    
    
    9Expected return on plan assets
    
    
    
    
    
    
    Total periodic cost
    
    $
    4
    
    
    $
    12
  9. Express expenses
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Aircraft fuel and related taxes
    
    $
    210
    
    
    $
    57
    
    
    $
    585
    
    
    $
    134Salaries and related costs
    
    
    40
    
    
    
    1
    
    
    
    132
    
    
    
    1Capacity purchases
    
    
    201
    
    
    
    92
    
    
    
    593
    
    
    
    240Aircraft rent
    
    
    3
    
    
    
    
    
    
    
    15
    
    
    
    Aircraft maintenance
    
    
    18
    
    
    
    
    
    
    
    55
    
    
    
    Other rent and landing fees
    
    
    41
    
    
    
    4
    
    
    
    119
    
    
    
    10Selling expenses
    
    
    36
    
    
    
    10
    
    
    
    111
    
    
    
    25Depreciation and amortization
    
    
    6
    
    
    
    
    
    
    
    18
    
    
    
    Other expenses
    
    
    98
    
    
    
    4
    
    
    
    302
    
    
    
    4Express expenses
    
    $
    653
    
    
    $
    168
    
    
    $
    1,930
    
    
    $
    414
 20




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Operating RevenuesMainline passenger
    
    $
    704
    
    
    $
    653
    
    
    $
    2,103
    
    
    $
    1,887Express passenger
    
    
    165
    
    
    
    135
    
    
    
    502
    
    
    
    367Cargo
    
    
    8
    
    
    
    7
    
    
    
    24
    
    
    
    24Other
    
    
    45
    
    
    
    54
    
    
    
    135
    
    
    
    151Total operating revenues
    
    
    922
    
    
    
    849
    
    
    
    2,764
    
    
    
    2,429Operating ExpensesAircraft fuel and related taxes
    
    
    256
    
    
    
    224
    
    
    
    703
    
    
    
    584Loss (gain) on fuel hedging instruments, net
    
    
    88
    
    
    
    (56
    )
    
    
    32
    
    
    
    (124
    )Salaries and related costs
    
    
    181
    
    
    
    178
    
    
    
    547
    
    
    
    526Express expenses
    
    
    160
    
    
    
    149
    
    
    
    464
    
    
    
    395Aircraft rent
    
    
    85
    
    
    
    83
    
    
    
    256
    
    
    
    241Aircraft maintenance
    
    
    64
    
    
    
    72
    
    
    
    188
    
    
    
    192Other rent and landing fees
    
    
    38
    
    
    
    45
    
    
    
    128
    
    
    
    132Selling expenses
    
    
    40
    
    
    
    45
    
    
    
    121
    
    
    
    126Special items, net
    
    
    15
    
    
    
    84
    
    
    
    8
    
    
    
    85Depreciation and amortization
    
    
    12
    
    
    
    14
    
    
    
    33
    
    
    
    37Other
    
    
    89
    
    
    
    80
    
    
    
    247
    
    
    
    244Total operating expenses
    
    
    1,028
    
    
    
    918
    
    
    
    2,727
    
    
    
    2,438Operating income (loss)
    
    
    (106
    )
    
    
    (69
    )
    
    
    37
    
    
    
    (9
    )Nonoperating income (expense)Interest income
    
    
    17
    
    
    
    5
    
    
    
    50
    
    
    
    12Interest expense, net
    
    
    (10
    )
    
    
    (20
    )
    
    
    (47
    )
    
    
    (62
    )Other, net
    
    
    
    
    
    
    1
    
    
    
    (10
    )
    
    
    3Nonoperating income (expense), net
    
    
    7
    
    
    
    (14
    )
    
    
    (7
    )
    
    
    (47
    )Income (loss) before income taxes and cumulative effect of change in
accounting principle
    
    
    (99
    )
    
    
    (83
    )
    
    
    30
    
    
    
    (56
    )Income tax provision
    
    
    1
    
    
    
    
    
    
    
    5
    
    
    
    Income (loss) before cumulative effect of change in accounting principle
    
    
    (100
    )
    
    
    (83
    )
    
    
    25
    
    
    
    (56
    )Cumulative effect of change in accounting principle, net
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (202
    )Net income (loss)
    
    $
    (100
    )
    
    $
    (83
    )
    
    $
    26
    
    
    $
    (258
    )Unaudited pro forma net income assuming change in method of accounting
was applied retroactively (Note 1)
    
    $
    (100
    )
    
    $
    (83
    )
    
    $
    25
    
    
    $
    (56
    )
  21




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##### Table of Contents



September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    574
    
    
    $
    632Short-term investments
    
    
    483
    
    
    
    319Accounts receivable, net
    
    
    167
    
    
    
    119Materials and supplies, net
    
    
    90
    
    
    
    87Prepaid expenses and other
    
    
    270
    
    
    
    169Total current assets
    
    
    1,584
    
    
    
    1,326Property and equipmentFlight equipment
    
    
    342
    
    
    
    348Ground property and equipment
    
    
    349
    
    
    
    309Less accumulated depreciation and amortization
    
    
    (415
    )
    
    
    (399
    )276
    
    
    
    258Equipment purchase deposits
    
    
    16
    
    
    
    11Total property and equipment
    
    
    292
    
    
    
    269Other assetsRestricted cash
    
    
    122
    
    
    
    229Advances to parent company
    
    
    261
    
    
    
    261Other assets, net
    
    
    72
    
    
    
    107Total other assets
    
    
    455
    
    
    
    597Total assets
    
    $
    2,331
    
    
    $
    2,192LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    3
    
    
    $
    94Accounts payable
    
    
    211
    
    
    
    146Payables to related parties, net
    
    
    872
    
    
    
    443Air traffic liability
    
    
    320
    
    
    
    218Accrued compensation and vacation
    
    
    113
    
    
    
    59Accrued taxes
    
    
    77
    
    
    
    25Other accrued expenses
    
    
    188
    
    
    
    129Total current liabilities
    
    
    1,784
    
    
    
    1,114Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    386
    
    
    
    936Deferred credits
    
    
    34
    
    
    
    39Other liabilities
    
    
    211
    
    
    
    213Total noncurrent liabilities and deferred credits
    
    
    631
    
    
    
    1,188Stockholders deficitCommon stock, $0.01 par value; 1,000 shares authorized and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    555
    
    
    
    555Accumulated deficit
    
    
    (639
    )
    
    
    (665
    )Total stockholders deficit
    
    
    (84
    )
    
    
    (110
    )Total liabilities and stockholders deficit
    
    $
    2,331
    
    
    $
    2,192
  22




---



##### Table of Contents



Nine Months Ended September 30,2006
    
    
    2005Net cash provided by operating activities
    
    $
    218
    
    
    $
    213Cash flows from investing activitiesPurchases of property and equipment
    
    
    (51
    )
    
    
    (148
    )Purchase of short-term investments
    
    
    (547
    )
    
    
    (316
    )Sales of short-term investments
    
    
    384
    
    
    
    304Decrease (increase) in long-term restricted cash
    
    
    107
    
    
    
    (22
    )Proceeds from disposition of assets
    
    
    2
    
    
    
    74Other
    
    
    (8
    )
    
    
    Net cash used for investing activities
    
    
    (113
    )
    
    
    (108
    )Cash flows from financing activitiesRepayments of debt
    
    
    (2
    )
    
    
    (181
    )Net increase (decrease) in payable to related parties
    
    
    (161
    )
    
    
    541Other
    
    
    
    
    
    
    (4
    )Net cash provided by (used for) financing activities
    
    
    (163
    )
    
    
    356Net (decrease) increase in cash and cash equivalents
    
    
    (58
    )
    
    
    461Cash and cash equivalents at beginning of period
    
    
    632
    
    
    
    128Cash and cash equivalents at end of period
    
    $
    574
    
    
    $
    589Non-cash investing and financing activitiesRepayment of ATSB, Airbus, and GECC loans by parent
    
    $
    520
    
    
    $
    Conversion of convertible notes
    
    
    95
    
    
    
    Reclassification of investments in debt securities to short-term investments
    
    
    
    
    
    
    30Notes payable issued under aircraft purchase agreement
    
    
    
    
    
    
    9Notes payable cancelled under aircraft purchase agreement
    
    
    4
    
    
    
    12Loan proceeds received by parent
    
    
    64
    
    
    
    Equipment purchases financed by capital leases
    
    
    3
    
    
    
    Supplemental informationCash paid for interest, net of amounts capitalized
    
    $
    32
    
    
    $
    28Income taxes paid
    
    
    5
    
    
    
    
  23




---



##### Table of Contents



America West Airlines, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of presentation
     Frequent Traveler Program
   Shared Operating Expenses
  24




---



##### Table of Contents



Three Months Ended September 30, 2006
    
    
    Nine Months Ended September 30, 2006AWA
    
    
    US Airways
    
    
    Total
    
    
    AWA
    
    
    US Airways
    
    
    TotalCorporate Expenses
    
    $
    41
    
    
    $
    70
    
    
    $
    111
    
    
    $
    120
    
    
    $
    192
    
    
    $
    312Airport Expenses
    
    
    26
    
    
    
    72
    
    
    
    98
    
    
    
    84
    
    
    
    207
    
    
    
    291Total Allocated Expenses
    
    $
    67
    
    
    $
    142
    
    
    $
    209
    
    
    $
    204
    
    
    $
    399
    
    
    $
    603
 Recent Accounting Pronouncements
      2. Special items
  25




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##### Table of Contents



Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Airbus restructuring (a)
    
    $
    
    
    
    $
    57
    
    
    $
    (51
    )
    
    $
    57Merger related transition expenses (b)
    
    
    15
    
    
    
    
    
    
    
    59
    
    
    
    Sale leaseback transactions (c)
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Other (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Special items, net
    
    $
    15
    
    
    $
    84
    
    
    $
    8
    
    
    $
    85
 
 (a)
    
    In connection with the merger and the Airbus Memorandum of Understanding (Airbus MOU)
executed between US Airways Group, US Airways and AWA, certain aircraft firm orders were
restructured. In connection with that restructuring, US Airways Group and America West
Holdings were required to pay restructuring fees totaling $89 million by means of set-off
against existing equipment deposits of US Airways and AWA held by Airbus of $39 million and
$50 million, respectively. Also in connection with the Airbus MOU, US Airways and AWA entered
into two loan agreements with commitments of up to $161 million and $89 million. As described
in further detail in Note 4, on March 31, 2006, the outstanding principal and accrued interest
on the $89 million loan was forgiven upon repayment in full of the $161 million loan in
accordance with terms of the Airbus loans. As a result, AWA recognized a gain
associated with the return of these equipment deposits upon forgiveness of the loan totaling
$51 million, consisting of the $50 million in equipment deposits and accrued interest of $1
million.(b)
    
    In connection with the merger, AWA incurred $15 million of transition and merger integration
costs in the third quarter of 2006. These items included $9 million in personnel costs for
severance, retention payments and stock awards; $4 million in professional and technical fees;
$1 million of aircraft livery costs and $1 million of transition-related sales and marketing
program expenses.In connection with the merger, AWA incurred $59 million of transition and merger integration
costs in the first nine months of 2006. These items included $16 million in personnel costs for
severance, retention payments and stock awards; $12 million in professional and technical fees;
$7 million of aircraft livery costs; $9 million in merger related aircraft lease return expenses;
$2 million of transition-related sales and marketing program expenses; $12 million of costs
associated with the integration of the AWA FlightFund and US Airways Dividend Miles frequent
traveler programs; and $1 million of other expenses.(c)
    
    In the third quarter of 2005, a $27 million loss was incurred related to the sale-leaseback
of six Boeing 737-300 aircraft and two Boeing 757 aircraft.(d)
    
    In August of 2004, AWA entered into a definitive agreement to return six Boeing 737-200
aircraft. Five of the aircraft were returned in 2004 and one was returned in January 2005.
In the first quarter of 2005 AWA recorded $1 million in special charges related to the final
Boeing 737-200 aircraft 3. Stock options (Adoption of SFAS 123R)
    26




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember
    
    
    September30, 2005
    
    
    30, 2005Net loss as reported
    
    $
    (83
    )
    
    $
    (258
    )Stock-based compensation determined under the fair-value based method
    
    
    (7
    )
    
    
    (9
    )Pro forma net loss
    
    $
    (90
    )
    
    $
    (267
    )
 Restricted Stock Unit Awards 
  WeightedNumber of
    
    
    average grant-2005 Equity Incentive Plan
    
    shares
    
    
    date fair valueNonvested balances at January 1, 2006
    
    
    687
    
    
    $
    26.17Granted
    
    
    254
    
    
    
    38.55Vested and released
    
    
    (24
    )
    
    
    42.89Forfeited
    
    
    (32
    )
    
    
    24.64Nonvested balance at September 30, 2006
    
    
    885
    
    
    $
    29.69
  27




---



##### Table of Contents



Stock Options and Stock Appreciation Rights 
  WeightedaverageStock
    
    
    Weighted
    
    
    remaining
    
    
    Aggregateoptions
    
    
    average
    
    
    contractual term
    
    
    intrinsic valueand SARs
    
    
    exercise price
    
    
    (years)
    
    
    (in millions)1994
Incentive Equity PlanBalance at January 1, 2006
    
    
    1,267
    
    
    $
    38.28Granted
    
    
    
    
    
    
    Exercised
    
    
    (391
    )
    
    
    22.62Forfeited
    
    
    
    
    
    
    Expired
    
    
    (62
    )
    
    
    50.96Balance at September 30, 2006
    
    
    814
    
    
    $
    44.83
    
    
    
    2.76
    
    
    $
    4Exercisable at September 30, 2006
    
    
    814
    
    
    $
    44.83
    
    
    
    2.76
    
    
    
    42002
Incentive Equity PlanBalance at January 1, 2006
    
    
    2,048
    
    
    $
    16.98Granted
    
    
    
    
    
    
    Exercised
    
    
    (1,171
    )
    
    
    15.90Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Balance at September 30, 2006
    
    
    877
    
    
    $
    18.42
    
    
    
    7.22
    
    
    $
    23Exercisable at September 30, 2006
    
    
    671
    
    
    $
    17.64
    
    
    
    6.72
    
    
    
    182005
Equity Incentive PlanBalance at January 1, 2006
    
    
    1,973
    
    
    $
    23.15Granted
    
    
    1,096
    
    
    
    39.09Exercised
    
    
    (52
    )
    
    
    19.30Forfeited
    
    
    (65
    )
    
    
    29.64Expired
    
    
    
    
    
    
    Balance at September 30, 2006
    
    
    2,952
    
    
    $
    28.99
    
    
    
    8.78
    
    
    $
    46Exercisable at September 30, 2006
    
    
    259
    
    
    $
    27.66
    
    
    
    4.04
    
    
    
    4
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Weighted average fair value
    
    $
    18.06
    
    
    $
    8.84
    
    
    $
    16.26
    
    
    $
    7.65Risk free interest rate
    
    
    4.8
    %
    
    
    3.4
    %
    
    
    4.8
    %
    
    
    2.3
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected life
    
    3.0 years
    
    
    4.0 years
    
    
    2.9 years
    
    
    4.0 yearsVolatility
    
    
    57
    %
    
    
    54
    %
    
    
    58
    %
    
    
    54
    %
 28




---



##### Table of Contents



4. Debt
  September 30,
    
    
    December 31,2006
    
    
    2005SecuredAWA Citibank Loan (former ATSB loan)
    
    $
    
    
    
    $
    250GECC term loan
    
    
    
    
    
    
    111Senior secured discount notes, variable interest rate of 9.39%, installments due 2005 through 2009
    
    
    34
    
    
    
    34Airbus Loans
    
    
    
    
    
    
    186Capital Lease Obligation, computer software, installments due through 2008
    
    
    3
    
    
    
    37
    
    
    
    581Unsecured7.5% convertible senior notes, interest only payments until due in 2009
    
    
    
    
    
    
    112Equipment notes payable
    
    
    
    
    
    
    4Industrial development bonds, fixed interest rate of 6.3% due 2023
    
    
    29
    
    
    
    29State loan
    
    
    
    
    
    
    1Juniper prepaid miles, variable interest rate of 10.08%, interest only payments until January 2008
    
    
    325
    
    
    
    325354
    
    
    
    471Total long-term debt and capital lease obligations
    
    
    391
    
    
    
    1,052Less: Unamortized discount on debt
    
    
    (2
    )
    
    
    (22
    )Current maturities
    
    
    (3
    )
    
    
    (94
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    386
    
    
    $
    936
 Refinancing Transaction 
  29




---



##### Table of Contents




    
    The amended and restated US Airways and AWA loans entered into on September 27, 2005 that
had previously been guaranteed by the Air Transportation Stabilization Board (the ATSB). On
October 19, 2005, $777 million of the loans, of which $752 million had been guaranteed by the
ATSB, was sold by the lenders by order of the ATSB to 13 fixed income investors, removing the
ATSB guarantee. At the time of repayment of these loans on March 31, 2006, the total
outstanding balance of the loans was $801 million, of which $551 million was outstanding
under the US Airways loan and $250 million was outstanding under the AWA loan. Proceeds were
also used to pay $15 million of accrued interest and fees on the US Airways loan, and $8
million of accrued interest and $5 million of prepayment penalty on the AWA loan.
    
    The $161 million loan entered into as of September 27, 2005 between US Airways and AWA and
Airbus Financial Services, for which US Airways Group was the guarantor. At the time of
repayment on March 31, 2006, the outstanding balance of the loan was $161 million. US Airways
and AWA also had an $89 million loan from Airbus Financial Services entered into as of
September 27, 2005. In accordance with the terms of the loan agreements, the outstanding
principal amount of the $89 million loan was to be forgiven in writing on the earlier of
December 31, 2010 or the date that the outstanding principal amount of, accrued interest on,
and all other amounts due under the Airbus $161 million loan were paid in full, provided that
US Airways Group complies with the delivery schedule for certain Airbus aircraft. As a result
of the prepayment of the $161 million loan on March 31, 2006, the $89 million loan agreement
was terminated and the $89 million loan, of which $89 million was outstanding, was forgiven
along with $1 million in accrued interest.
    
    Two loans provided by GECC to AWA pursuant to loan agreements entered into as of September
3, 2004 referred to as the Spare Parts Facility and the Engines Facility. At the time of
repayment, the principal amounts outstanding under the Spare Parts Facility and the Engines
Facility were $76 million and $34 million, respectively. Proceeds were also used to pay $1
million of accrued interest and $1 million of prepayment penalties on these two GECC loans.
  Conversion of 7.5% Convertible Senior Notes due 2009 
 30




---



##### Table of Contents



5. Related party transactions
  September 30, 2006
    
    
    December 31, 2005US Airways Group
    
    $
    (1,096
    )
    
    $
    (465
    )America West Holdings
    
    
    9
    
    
    
    (1
    )US Airways
    
    
    211
    
    
    
    20Other US Airways Group wholly owned subsidiaries
    
    
    4
    
    
    
    3$
    (872
    )
    
    $
    (443
    )
   6. Income Taxes
    7. Express expenses
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Aircraft fuel and related taxes
    
    $
    60
    
    
    $
    53
    
    
    $
    163
    
    
    $
    129Capacity purchases
    
    
    87
    
    
    
    83
    
    
    
    261
    
    
    
    231Other rent and landing fees
    
    
    3
    
    
    
    3
    
    
    
    9
    
    
    
    9Selling expenses
    
    
    9
    
    
    
    9
    
    
    
    29
    
    
    
    24Other expenses
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2Express expenses
    
    $
    160
    
    
    $
    149
    
    
    $
    464
    
    
    $
    395
 31




---



##### Table of Contents



Successor
    
    
    Predecessor
    
    
    Successor
    
    
    PredecessorCompany
    
    
    Company
    
    
    Company
    
    
    CompanyThree Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Operating RevenuesMainline passenger
    
    $
    1,348
    
    
    $
    1,273
    
    
    $
    3,945
    
    
    $
    3,737Express passenger
    
    
    538
    
    
    
    430
    
    
    
    1,593
    
    
    
    1,182Cargo
    
    
    32
    
    
    
    24
    
    
    
    90
    
    
    
    68Other
    
    
    166
    
    
    
    154
    
    
    
    484
    
    
    
    465Total operating revenues
    
    
    2,084
    
    
    
    1,881
    
    
    
    6,112
    
    
    
    5,452Operating ExpensesAircraft fuel and related taxes
    
    
    464
    
    
    
    409
    
    
    
    1,239
    
    
    
    1,111Salaries and related costs
    
    
    347
    
    
    
    332
    
    
    
    1,027
    
    
    
    1,073Express expenses
    
    
    523
    
    
    
    477
    
    
    
    1,556
    
    
    
    1,372Aircraft rent
    
    
    96
    
    
    
    98
    
    
    
    290
    
    
    
    293Aircraft maintenance
    
    
    78
    
    
    
    90
    
    
    
    244
    
    
    
    253Other rent and landing fees
    
    
    108
    
    
    
    104
    
    
    
    304
    
    
    
    319Selling expenses
    
    
    81
    
    
    
    78
    
    
    
    227
    
    
    
    258Special items, net
    
    
    12
    
    
    
    
    
    
    
    9
    
    
    
    Depreciation and amortization
    
    
    32
    
    
    
    46
    
    
    
    105
    
    
    
    152Other
    
    
    219
    
    
    
    266
    
    
    
    664
    
    
    
    763Total operating expenses
    
    
    1,960
    
    
    
    1,900
    
    
    
    5,665
    
    
    
    5,594Operating income (loss)
    
    
    124
    
    
    
    (19
    )
    
    
    447
    
    
    
    (142
    )Nonoperating income (expense)Interest income
    
    
    27
    
    
    
    6
    
    
    
    61
    
    
    
    15Interest expense, net
    
    
    (55
    )
    
    
    (66
    )
    
    
    (162
    )
    
    
    (222
    )Reorganization items, net
    
    
    
    
    
    
    664
    
    
    
    
    
    
    
    636Other, net
    
    
    2
    
    
    
    (1
    )
    
    
    1
    
    
    
    (9
    )Nonoperating income (expense), net
    
    
    (26
    )
    
    
    603
    
    
    
    (100
    )
    
    
    420Income before income taxes
    
    
    98
    
    
    
    584
    
    
    
    347
    
    
    
    278Income tax provision (benefit)
    
    
    60
    
    
    
    
    
    
    
    62
    
    
    
    (2
    )Net income
    
    $
    38
    
    
    $
    584
    
    
    $
    285
    
    
    $
    280
  32




---



##### Table of Contents



September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    554
    
    
    $
    462Short-term investments
    
    
    679
    
    
    
    132Restricted cash
    
    
    1
    
    
    
    8Accounts receivable, net
    
    
    224
    
    
    
    227Materials and supplies, net
    
    
    104
    
    
    
    109Prepaid expenses and other
    
    
    181
    
    
    
    213Total current assets
    
    
    1,743
    
    
    
    1,151Property and equipmentFlight equipment
    
    
    1,554
    
    
    
    1,492Ground property and equipment
    
    
    201
    
    
    
    205Less accumulated depreciation and amortization
    
    
    (108
    )
    
    
    (28
    )1,647
    
    
    
    1,669Equipment purchase deposits
    
    
    32
    
    
    
    32Total property and equipment
    
    
    1,679
    
    
    
    1,701Other assetsGoodwill
    
    
    655
    
    
    
    732Other intangibles, net
    
    
    519
    
    
    
    541Restricted cash
    
    
    515
    
    
    
    563Other assets, net
    
    
    152
    
    
    
    120Total other assets
    
    
    1,841
    
    
    
    1,956Total assets
    
    $
    5,263
    
    
    $
    4,808LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesCurrent maturities of debt and capital leases
    
    $
    89
    
    
    $
    117Accounts payable
    
    
    303
    
    
    
    273Payables to related parties, net
    
    
    1,421
    
    
    
    336Air traffic liability
    
    
    561
    
    
    
    570Accrued compensation and vacation
    
    
    96
    
    
    
    145Accrued taxes
    
    
    88
    
    
    
    108Other accrued expenses
    
    
    640
    
    
    
    684Total current liabilities
    
    
    3,198
    
    
    
    2,233Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    1,121
    
    
    
    1,855Deferred gains and credits
    
    
    183
    
    
    
    215Postretirement benefits other than pensions
    
    
    184
    
    
    
    189Employee benefit liabilities and other
    
    
    425
    
    
    
    449Total noncurrent liabilities and deferred credits
    
    
    1,913
    
    
    
    2,708Stockholders equity (deficit)Common stock, $1 par, 1,000 shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1
    
    
    
    1Accumulated equity (deficit)
    
    
    151
    
    
    
    (134
    )Total stockholders equity (deficit)
    
    
    152
    
    
    
    (133
    )Total liabilities and stockholders equity (deficit)
    
    $
    5,263
    
    
    $
    4,808
  33




---



##### Table of Contents



Successor
    
    
    PredecessorCompany
    
    
    Company2006
    
    
    2005Net cash provided by (used for) operating activities before reorganization items
    
    $
    303
    
    
    $
    (577
    )Reorganization items, net
    
    
    
    
    
    
    (85
    )Net cash provided by (used for) operating activities
    
    
    303
    
    
    
    (662
    )Cash flows from investing activitiesCapital expenditures and equipment deposits
    
    
    (80
    )
    
    
    (47
    )Proceeds from dispositions of property
    
    
    2
    
    
    
    88Purchases of short-term investments
    
    
    (1,138
    )
    
    
    Sales of short-term investments
    
    
    591
    
    
    
    Decrease (increase) in long-term restricted cash
    
    
    50
    
    
    
    (69
    )Net cash used for investing activities
    
    
    (575
    )
    
    
    (28
    )Cash flows from financing activitiesProceeds from issuance of debt
    
    
    48
    
    
    
    140Proceeds from issuance of debtor-in-possession financings
    
    
    
    
    
    
    125Repayments of debt and capital lease obligations
    
    
    (87
    )
    
    
    (233
    )Increase in related party payable
    
    
    403
    
    
    
    300Net cash provided by financing activities
    
    
    364
    
    
    
    332Net increase (decrease) in cash and cash equivalents
    
    
    92
    
    
    
    (358
    )Cash and cash equivalents at beginning of period
    
    
    462
    
    
    
    734Cash and cash equivalents at end of period
    
    $
    554
    
    
    $
    376Non-cash investing and financing activitiesRepayment of ATSB and Airbus loans by parent
    
    $
    712
    
    
    $
    Loan proceeds received by parent
    
    
    65
    
    
    
    Reduction in debt related to sale leaseback transaction
    
    
    
    
    
    
    633Reduction in flight equipment related to sale leaseback transaction
    
    
    
    
    
    
    517Reduction in debt related to sale of flight equipment
    
    
    
    
    
    
    167Flight equipment acquired through issuance of debt
    
    
    
    
    
    
    53Payment of bridge facility by America West Airlines
    
    
    
    
    
    
    57Issuance of note to settle bankruptcy claim
    
    
    
    
    
    
    10Conversion of DIP financing into equity of US Airways Group
    
    
    
    
    
    
    125Supplemental informationCash paid for income taxes
    
    $
    1
    
    
    $
    Cash paid for interest, net of amounts capitalized
    
    
    118
    
    
    
    230
  34




---



##### Table of Contents



US Airways, Inc.
 
 Notes to Condensed Financial Statements
 (Unaudited)
 1. Basis of presentation
      35




---



##### Table of Contents



Frequent Traveler Program
   Shared Operating Expenses
  Three Months Ended September 30, 2006
    
    
    Nine Months Ended September 30, 2006AWA
    
    
    US Airways
    
    
    Total
    
    
    AWA
    
    
    US Airways
    
    
    TotalCorporate Expenses
    
    $
    41
    
    
    $
    70
    
    
    $
    111
    
    
    $
    120
    
    
    $
    192
    
    
    $
    312Airport Expenses
    
    
    26
    
    
    
    72
    
    
    
    98
    
    
    
    84
    
    
    
    207
    
    
    
    291Total Allocated Expenses
    
    $
    67
    
    
    $
    142
    
    
    $
    209
    
    
    $
    204
    
    
    $
    399
    
    
    $
    603
 Recent Accounting Pronouncements
    36




---



##### Table of Contents



2. Special items
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2006Airbus restructuring (a)
    
    $
    
    
    
    $
    (40
    )Merger related transition expenses (b)
    
    
    12
    
    
    
    49Special items, net
    
    $
    12
    
    
    $
    9
 
 (a)
    
    In connection with the merger and the Airbus Memorandum of Understanding (Airbus MOU)
executed between US Airways Group, US Airways and AWA, certain aircraft firm orders were
restructured. In connection with that restructuring, US Airways Group and America West
Holdings were required to pay restructuring fees totaling $89 million by means of set-off
against existing equipment deposits of US Airways and AWA held by Airbus of $39 million and
$50 million, respectively. Also in connection with the Airbus MOU, US Airways and AWA entered
into two loan agreements with commitments of up to $161 million and $89 million. As described
in further detail in Note 4, on March 31, 2006, the outstanding principal and accrued interest
on the $89 million loan was forgiven upon repayment in full of the $161 million loan in
accordance with terms of the Airbus loans. As a result, US Airways recognized a gain
associated with the return of these equipment deposits upon forgiveness of the loan totaling
$40 million, consisting of the $39 million in equipment deposits and accrued interest of $1
million.
 (b)
    
    In connection with the merger, US Airways incurred $12 million of transition and merger
integration costs in the third quarter of 2006. These items included $2 million in personnel
costs for severance, retention payments and stock awards; $9 million in continuing
professional fees associated with US Airways bankruptcy proceedings; and $1 million in
employee moving expenses.
 37




---



##### Table of Contents



In connection with the merger, US Airways incurred $49 million of transition and merger
integration costs in the first nine months of 2006. These items included $23 million in personnel
costs for severance, retention payments and stock awards; $17 million in continuing professional
fees associated with US Airways bankruptcy proceedings; $6 million in employee moving expenses;
$3 million of aircraft livery costs; $1 million of programming service expense; and a $1 million
credit association with reduced costs in connection with the integration of the AWA FlightFund
and US Airways Dividend Miles frequent traveler programs.
 3. Stock options (Adoption of SFAS 123R)
     Restricted Stock Unit Awards 
  WeightedNumber of
    
    
    average grant-2005 Equity Incentive Plan
    
    shares
    
    
    date fair valueNonvested balances at January 1, 2006
    
    
    687
    
    
    $
    26.17Granted
    
    
    254
    
    
    
    38.55Vested and released
    
    
    (24
    )
    
    
    42.89Forfeited
    
    
    (32
    )
    
    
    24.64Nonvested balance at September 30, 2006
    
    
    885
    
    
    $
    29.69
  Stock Options and Stock Appreciation Rights 
 38




---



##### Table of Contents



WeightedaverageStock
    
    
    Weighted
    
    
    remaining
    
    
    Aggregateoptions
    
    
    average
    
    
    contractual term
    
    
    intrinsic valueand SARs
    
    
    exercise price
    
    
    (years)
    
    
    (in millions)1994 Incentive Equity PlanBalance at January 1, 2006
    
    
    1,267
    
    
    $
    38.28Granted
    
    
    
    
    
    
    Exercised
    
    
    (391
    )
    
    
    22.62Forfeited
    
    
    
    
    
    
    Expired
    
    
    (62
    )
    
    
    50.96Balance at September 30, 2006
    
    
    814
    
    
    $
    44.83
    
    
    
    2.76
    
    
    $
    4Exercisable at September 30, 2006
    
    
    814
    
    
    $
    44.83
    
    
    
    2.76
    
    
    
    42002 Incentive Equity PlanBalance at January 1, 2006
    
    
    2,048
    
    
    $
    16.98Granted
    
    
    
    
    
    
    Exercised
    
    
    (1,171
    )
    
    
    15.90Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Balance at September 30, 2006
    
    
    877
    
    
    $
    18.42
    
    
    
    7.22
    
    
    $
    23Exercisable at September 30, 2006
    
    
    671
    
    
    $
    17.64
    
    
    
    6.72
    
    
    
    182005 Equity Incentive PlanBalance at January 1, 2006
    
    
    1,973
    
    
    $
    23.15Granted
    
    
    1,096
    
    
    
    39.09Exercised
    
    
    (52
    )
    
    
    19.30Forfeited
    
    
    (65
    )
    
    
    29.64Expired
    
    
    
    
    
    
    Balance at September 30, 2006
    
    
    2,952
    
    
    $
    28.99
    
    
    
    8.78
    
    
    $
    46Exercisable at September 30, 2006
    
    
    259
    
    
    $
    27.66
    
    
    
    4.04
    
    
    
    4
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Weighted average fair value
    
    $
    18.06
    
    
    $
    8.84
    
    
    $
    16.26
    
    
    $
    7.65Risk free interest rate
    
    
    4.8
    %
    
    
    3.4
    %
    
    
    4.8
    %
    
    
    2.3
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected life
    
    3.0 years
    
    
    4.0 years
    
    
    2.9 years
    
    
    4.0 yearsVolatility
    
    
    57
    %
    
    
    54
    %
    
    
    58
    %
    
    
    54
    %
   39




---



##### Table of Contents



Agreements with ALPA 
  Risk free interest rate
    
    
    4.4
    %Expected dividend yield
    
    
    
    %Contractual term
    
    5.0 yearsVolatility
    
    
    69.8
    %
  4. Debt
  September 30,
    
    
    December 31,2006
    
    
    2005SecuredEquipment notes payable, variable interest rates of 6.89% to 9.82%
    
    $
    1,222
    
    
    $
    1,240US Airways Citibank Loan (former ATSB loan)
    
    
    
    
    
    
    551Slot financing, interest rate of 8%, installments due through 2015
    
    
    47
    
    
    
    50Capital lease obligations, interest rate of 8%, installments due through 2021
    
    
    41
    
    
    
    46GE Credit Facility, variable interest rate of 9.75%, installments due 2006 to 2010
    
    
    21
    
    
    
    28Airbus Loans
    
    
    
    
    
    
    1861,331
    
    
    
    2,101UnsecuredNote payable to Pension Benefit Guaranty Corporation, interest rate of 6%,
interest only payments until due in 2012
    
    
    10
    
    
    
    1010
    
    
    
    10Total long-term debt and capital lease obligations
    
    
    1,341
    
    
    
    2,111Less: Unamortized discount on debt
    
    
    (131
    )
    
    
    (139
    )Current maturities
    
    
    (89
    )
    
    
    (117
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    1,121
    
    
    $
    1,855
 Refinancing Transaction 
 40




---



##### Table of Contents




    
    The amended and restated US Airways and AWA loans entered into on September 27, 2005 that
had previously been guaranteed by the Air Transportation Stabilization Board (the ATSB). On
October 19, 2005, $777 million of the loans, of which $752 million had been guaranteed by the
ATSB, was sold by the lenders by order of the ATSB to 13 fixed income investors, removing the
ATSB guarantee. At the time of repayment of these loans on March 31, 2006, the total
outstanding balance of the loans was $801 million, of which $551 million was outstanding
under the US Airways loan and $250 million was outstanding under the AWA loan. Proceeds were
also used to pay $15 million of accrued interest and fees on the US Airways loan, and $8
million of accrued interest and $5 million of prepayment penalty on the AWA loan.
    
    The $161 million loan entered into as of September 27, 2005 between US Airways and AWA and
Airbus Financial Services, for which US Airways Group was the guarantor. At the time of
repayment on March 31, 2006, the outstanding balance of the loan was $161 million. US Airways
and AWA also had an $89 million loan from Airbus Financial Services entered into as of
September 27, 2005. In accordance with the terms of the loan agreements, the outstanding
principal amount of the $89 million loan was to be forgiven in writing on the earlier of
December 31, 2010 or the date that the outstanding principal amount of, accrued interest on,
and all other amounts due under the Airbus $161 million loan were paid in full, provided that
US Airways Group complies with the delivery schedule for certain Airbus aircraft. As a result
of the prepayment of the $161 million loan on March 31, 2006, the $89 million loan agreement
was terminated and the $89 million loan, of which $89 million was outstanding, was forgiven
along with $1 million in accrued interest.
    
    Two loans provided by GECC to AWA pursuant to loan agreements entered into as of September
3, 2004 referred to as the Spare Parts Facility and the Engines Facility. At the time of
repayment, the principal amounts outstanding under the Spare Parts Facility and the Engines
Facility were $76 million and $34 million, respectively. Proceeds were also used to pay $1
million of accrued interest and $1 million of prepayment penalties on these two GECC loans.
  5. Emergence from bankruptcy and merger
 (a) Claims resolution
  41




---



##### Table of Contents



(b) Fresh-start reporting and purchase accounting updates
   Goodwill reported as of December 31, 2005
    
    $
    732Utilization of pre-merger NOL
    
    
    (59
    )Materials and supplies, net
    
    
    32Accounts receivable
    
    
    (22
    )Other assets
    
    
    (22
    )Non current employee benefits and other
    
    
    12Related party payables
    
    
    (9
    )Property and equipment
    
    
    6Long-term debt
    
    
    (6
    )Accrued compensation and vacation
    
    
    (4
    )Other accrued expenses
    
    
    (3
    )Accrued taxes
    
    
    (2
    )Accounts payable
    
    
    (1
    )Other intangibles, net
    
    
    1Goodwill reported as of September 30, 2006
    
    $
    655
  (c) Reorganization items
  42




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2005Gain related to curtailment of postretirement benefits (a)
    
    $
    1,237
    
    
    $
    1,420Gain related to curtailment of pension plans (b)
    
    
    868
    
    
    
    801Discharge of other liabilities (c)
    
    
    75
    
    
    
    75Reversal of aircraft order penalties (d)
    
    
    32
    
    
    
    30Interest on accumulated cash
    
    
    2
    
    
    
    7Damage and deficiency claims (e)
    
    
    16
    
    
    
    2Revaluation of assets and liabilities (f)
    
    
    (1,498
    )
    
    
    (1,498
    )Severance including benefits (g)
    
    
    4
    
    
    
    (96
    )Professional fees
    
    
    (23
    )
    
    
    (57
    )Airbus equipment deposits and credits (h)
    
    
    (38
    )
    
    
    (35
    )Aircraft sales and restructured leases (i)
    
    
    (5
    )
    
    
    (5
    )Write off of deferred compensation
    
    
    (4
    )
    
    
    (4
    )Other
    
    
    (2
    )
    
    
    (4
    )Reorganization items, net
    
    $
    664
    
    
    $
    636
 
 (a)
    
    In January 2005, the Bankruptcy Court approved settlement agreements between US Airways
and its unions and the court-appointed Section 1114 Committee, representing retirees other
than those represented by the International Association of Machinists and Aerospace Workers
and Transport Workers Union, to begin the significant curtailment of postretirement medical
benefits. US Airways recognized a gain of $183 million in connection with this curtailment.
Upon the emergence from bankruptcy and effectiveness of the plan of reorganization, an
additional gain of $1.24 billion was recognized as the liability associated with the
postretirement medical benefits was reduced to fair market value.(b)
    
    Also in January 2005, US Airways terminated its three mainline defined benefit plans. US
Airways recognized a curtailment gain of $24 million and a $91 million minimum pension
liability adjustment in connection with the terminations in the first quarter of 2005. Upon
the effective date of the plan of reorganization and in connection with the settlement with
the Pension Benefit Guaranty Corporation (PBGC), the remaining liabilities associated with
these plans, including the $91 million recorded as an adjustment to the minimum pension
liability in the first quarter, were written off, net of settlement amounts.(c)
    
    Reflects the discharge of trade accounts payable and other liabilities upon emergence from
bankruptcy. Most of these obligations were only entitled to receive such distributions of
cash and common stock as provided for under the plan of reorganization.(d)
    
    In 2003, US Airways recorded a charge in connection with its intention not to take
delivery of certain aircraft scheduled for future delivery. In connection with the Airbus
MOU, $33 million of penalties have been reversed. As a result of US Airwayss bankruptcy
filing in September 2004, US Airways was not able to secure the financing necessary to
take on-time delivery of three scheduled regional jet aircraft and therefore accrued penalties
of $2 million in the first quarter of 2005. US Airways recorded an additional $1 million
in penalties in the third quarter of 2005 until delivery of these aircraft was made to a US
Airways Express affiliate in August 2005.(e)
    
    Damage and deficiency claims arose as a result of US Airways election to restructure,
abandon or reject aircraft debt and leases during the bankruptcy proceedings. US Airways
recorded $2 million and $14 million in damages and deficiency claims in the fourth quarter of
2004 and in the first six months of 2005, respectively. As a result of the confirmations of
the Plan of Reorganization and the effectiveness of the merger, these claims were withdrawn
and the accruals reversed.(f)
    
    As of September 30, 2005, US Airways recorded $1.46 billion of adjustments to reflect
assets and liabilities at fair value, including a net write-down of goodwill of $1.82 billion.
Goodwill of $584 million was recorded to reflect the excess of the estimated fair value of
liabilities and equity over identifiable assets.(g)
    
    Since filing for bankruptcy on September 12, 2004, US Airways achieved cost-savings
agreements with its principal collective bargaining groups. In connection with the new labor
agreements, approximately 5,000 employees across several of US Airways labor groups were
involuntarily terminated or participated in voluntary furlough and termination programs.(h)
    
    In connection with the Airbus MOU, US Airways was required to pay a restructuring fee of
$39 million, which was paid by means of offset against existing equipment deposits held by
Airbus. US Airways also received credits from Airbus totaling $3 million throughout 2005,
primarily related to equipment deposits.(i)
    
    The GE Merger Memorandum of Understanding (GE Merger MOU) provided for the continued use of
certain leased Airbus, Boeing and regional jet aircraft and the modification of monthly lease
rates and the return of certain other leased Airbus and 43




---



##### Table of Contents



Boeing aircraft. The GE Merger MOU also provided for the sale-leaseback of assets securing
various GE obligations. In connection with these transactions, the US Airways recorded a net
loss of $5 million. 6. Related party transactions
  September 30, 2006
    
    
    December 31, 2005US Airways Group
    
    $
    1,127
    
    
    $
    269AWA
    
    
    211
    
    
    
    20Other US Airways Group wholly owned subsidiaries
    
    
    83
    
    
    
    47$
    1,421
    
    
    $
    336
    7. Income Taxes
    8. Employee benefit plans
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    1
    
    
    $
    1
    
    
    $
    3
    
    
    $
    8Interest cost
    
    
    3
    
    
    
    4
    
    
    
    9
    
    
    
    22Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of:Prior service benefit
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    (76
    )Actuarial gain
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (11
    )Net periodic (income) cost
    
    
    4
    
    
    
    (31
    )
    
    
    12
    
    
    
    (57
    )Curtailment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183
    )Fresh start gain
    
    
    
    
    
    
    (1,247
    )
    
    
    
    
    
    
    (1,247
    )Total (income) cost
    
    $
    4
    
    
    $
    (1,278
    )
    
    $
    12
    
    
    $
    (1,487
    )
 44




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2005Service cost
    
    $
    
    
    
    $
    1Interest cost
    
    
    
    
    
    
    6Expected return on plan assets
    
    
    
    
    
    
    (5
    )Net periodic (income) cost
    
    
    
    
    
    
    2Curtailment gain
    
    
    
    
    
    
    (24
    )Settlement gain
    
    
    (868
    )
    
    
    (868
    )Total (income) cost
    
    $
    (868
    )
    
    $
    (890
    )
    45




---



##### Table of Contents



9. Express expenses
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Aircraft fuel and related taxes
    
    $
    150
    
    
    $
    135
    
    
    $
    422
    
    
    $
    328Salaries and related costs
    
    
    10
    
    
    
    19
    
    
    
    42
    
    
    
    63Capacity purchases
    
    
    257
    
    
    
    214
    
    
    
    764
    
    
    
    659Aircraft rent
    
    
    1
    
    
    
    7
    
    
    
    10
    
    
    
    21Aircraft maintenance
    
    
    1
    
    
    
    3
    
    
    
    4
    
    
    
    9Other rent and landing fees
    
    
    33
    
    
    
    29
    
    
    
    95
    
    
    
    88Selling expenses
    
    
    27
    
    
    
    22
    
    
    
    82
    
    
    
    66Depreciation and amortization
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    7Other expenses
    
    
    44
    
    
    
    46
    
    
    
    137
    
    
    
    131Express expenses
    
    $
    523
    
    
    $
    477
    
    
    $
    1,556
    
    
    $
    1,372
 46




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
      47




---



##### Table of Contents



Recent Developments
 Refinancing Transaction 
    
    
    The amended and restated US Airways and AWA loans entered into on September 27,
2005 that had previously been guaranteed by the Air Transportation Stabilization Board
(the ATSB). On October 19, 2005, $777 million of the loans, of which $752 million had
been guaranteed by the ATSB, was sold by the lenders by order of the ATSB to 13 fixed
income investors, removing the ATSB guarantee. At the time of repayment of these loans on
March 31, 2006, the total outstanding balance of the loans was $801 million, of which
$551 million was outstanding under the US Airways loan and $250 million was outstanding
under the AWA loan.
    
    The $161 million loan entered into as of September 27, 2005 between US Airways and
AWA and Airbus Financial Services, for which US Airways Group was the guarantor. At the
time of repayment on March 31, 2006, the outstanding balance of the loan was $161
million. US Airways and AWA also had an $89 million loan from Airbus Financial Services
entered into as of September 27, 2005. In accordance with the terms of the loan
agreements, the outstanding principal amount of the $89 million loan was to be forgiven
in writing on the earlier of December 31, 2010 or the date that the outstanding principal
amount of, accrued interest on, and all other amounts due under the Airbus $161 million
loan were paid in full, provided that the Company complies with the delivery schedule for
certain Airbus aircraft. As a result of the prepayment of the $161 million loan on March
31, 2006, the $89 million loan agreement was terminated and the $89 million loan, of
which $89 million was outstanding, was forgiven.
    
    Two loans provided by GECC to AWA pursuant to loan agreements entered into as of
September 3, 2004 referred to as the Spare Parts Facility and the Engines Facility. At
the time of repayment, the principal amounts outstanding under the Spare Parts Facility
and the Engines Facility were $76 million and $34 million, respectively. Proceeds were
also used to pay $1 million of accrued interest and $1 million of prepayment penalties on
these two GECC loans.
  48




---



##### Table of Contents



Conversion of 7.5% Convertible Senior Notes due 2009 
 Conversion of 7% Senior Convertible Notes due 2020
 US Airways Groups Emergence from Bankruptcy
  49




---



##### Table of Contents



US Airways Groups Results of Operations
 US Airways Group
Consolidated Statement of Operations
(in millions)
 Three months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Operating revenues:Mainline passenger
    
    $
    2,052
    
    
    $
    704
    
    
    $
    6,048
    
    
    $
    1,939Express passenger
    
    
    703
    
    
    
    155
    
    
    
    2,095
    
    
    
    388Cargo
    
    
    40
    
    
    
    9
    
    
    
    114
    
    
    
    25Other
    
    
    173
    
    
    
    61
    
    
    
    514
    
    
    
    157Total operating revenues
    
    
    2,968
    
    
    
    929
    
    
    
    8,771
    
    
    
    2,509Operating expenses:Aircraft fuel and related taxes
    
    
    719
    
    
    
    252
    
    
    
    1,943
    
    
    
    611Loss (gain) on fuel hedging instruments, net
    
    
    88
    
    
    
    (56
    )
    
    
    32
    
    
    
    (124
    )Salaries and related costs
    
    
    529
    
    
    
    193
    
    
    
    1,574
    
    
    
    542Express expenses
    
    
    653
    
    
    
    168
    
    
    
    1,930
    
    
    
    414Aircraft rent
    
    
    181
    
    
    
    88
    
    
    
    546
    
    
    
    246Aircraft maintenance
    
    
    142
    
    
    
    76
    
    
    
    432
    
    
    
    196Other rent and landing fees
    
    
    146
    
    
    
    50
    
    
    
    432
    
    
    
    137Selling expenses
    
    
    120
    
    
    
    48
    
    
    
    348
    
    
    
    129Special items, net
    
    
    27
    
    
    
    84
    
    
    
    18
    
    
    
    85Depreciation and amortization
    
    
    42
    
    
    
    16
    
    
    
    132
    
    
    
    39Other
    
    
    305
    
    
    
    93
    
    
    
    901
    
    
    
    259Total operating expenses
    
    
    2,952
    
    
    
    1,012
    
    
    
    8,288
    
    
    
    2,534Operating income (loss)
    
    
    16
    
    
    
    (83
    )
    
    
    483
    
    
    
    (25
    )Nonoperating income (expense)Interest income
    
    
    45
    
    
    
    4
    
    
    
    111
    
    
    
    8Interest expense, net
    
    
    (74
    )
    
    
    (21
    )
    
    
    (221
    )
    
    
    (60
    )Other, net
    
    
    (4
    )
    
    
    1
    
    
    
    (14
    )
    
    
    3Nonoperating expense, net
    
    
    (33
    )
    
    
    (16
    )
    
    
    (124
    )
    
    
    (49
    )Income (loss) before taxes and cumulative effect of change in accounting principle
    
    
    (17
    )
    
    
    (99
    )
    
    
    359
    
    
    
    (74
    )Income tax provision
    
    
    61
    
    
    
    
    
    
    
    68
    
    
    
    Income (loss) before cumulative effect of change in accounting principle
    
    
    (78
    )
    
    
    (99
    )
    
    
    291
    
    
    
    (74
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (202
    )Net income (loss)
    
    $
    (78
    )
    
    $
    (99
    )
    
    $
    292
    
    
    $
    (276
    )
    50




---



##### Table of Contents



Three Months Ended September 30, 2006
Compared with the
Three Months Ended September 30, 2005
    51




---



##### Table of Contents



Nine Months Ended September 30, 2006
Compared with the
Nine Months Ended September 30, 2005
    AWAs Results of Operations
   52




---



##### Table of Contents



Three Months Ended
    
    
    Percent
    
    
    Nine Months Ended
    
    
    PercentSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2006
    
    
    2005
    
    
    2006-2005
    
    
    2006
    
    
    2005
    
    
    2006-2005Revenue passenger miles (millions) (a)
    
    
    6,041
    
    
    
    6,333
    
    
    
    (4.6
    )
    
    
    17,939
    
    
    
    18,390
    
    
    
    (2.5
    )Available seat miles (millions) (b)
    
    
    7,567
    
    
    
    7,875
    
    
    
    (3.9
    )
    
    
    22,347
    
    
    
    22,932
    
    
    
    (2.6
    )Load factor (c)
    
    
    79.8
    
    
    
    80.4
    
    
    (0.6
    )pts
    
    
    80.3
    
    
    
    80.2
    
    
    0.1
    ptsYield (d)
    
    
    11.65
    
    
    
    10.31
    
    
    
    13.0
    
    
    
    11.72
    
    
    
    10.26
    
    
    
    14.3Passenger revenue per available seat
mile (e)
    
    
    9.30
    
    
    
    8.29
    
    
    
    12.2
    
    
    
    9.41
    
    
    
    8.23
    
    
    
    14.4Cost per available seat mile (f)
    
    
    11.47
    
    
    
    9.78
    
    
    
    17.4
    
    
    
    10.13
    
    
    
    8.91
    
    
    
    13.7Passenger enplanements (thousands) (g)
    
    
    5,463
    
    
    
    5,802
    
    
    
    (5.8
    )
    
    
    16,099
    
    
    
    16,725
    
    
    
    (3.7
    )Aircraft at end of period
    
    
    133
    
    
    
    142
    
    
    
    (6.3
    )
    
    
    133
    
    
    
    142
    
    
    
    (6.3
    )Block hours (h)
    
    
    139,691
    
    
    
    144,332
    
    
    
    (3.2
    )
    
    
    412,844
    
    
    
    424,194
    
    
    
    (2.7
    )Average stage length (miles) (i)
    
    
    1,024
    
    
    
    1,030
    
    
    
    (0.6
    )
    
    
    1,030
    
    
    
    1,030
    
    
    
    Average passenger journey (miles) (j)
    
    
    1,619
    
    
    
    1,733
    
    
    
    (6.6
    )
    
    
    1,548
    
    
    
    1,680
    
    
    
    (7.8
    )Gallons of aircraft fuel consumed
(millions)
    
    
    112.7
    
    
    
    117.0
    
    
    
    (3.6
    )
    
    
    329.0
    
    
    
    338.6
    
    
    
    (2.8
    )Average aircraft fuel price including
tax (per gallon)
    
    
    2.27
    
    
    
    1.92
    
    
    
    18.4
    
    
    
    2.14
    
    
    
    1.72
    
    
    
    24.0Full time equivalent employees at end
of period
    
    
    12,365
    
    
    
    11,769
    
    
    
    5.1
    
    
    
    12,365
    
    
    
    11,769
    
    
    
    5.1
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. A RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. An ASM represents one seat flown
one mile.(c)
    
    Load factor  The percentage of available seats that are filled with revenue passengers.(d)
    
    Yield  A measure of airline revenue derived by dividing passenger revenue by revenue
passenger miles and expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Total passenger revenues divided by
total available seat miles.(f)
    
    Cost per available seat mile (CASM)  Total mainline operating expenses divided by total
available seat miles.(g)
    
    Passenger enplanements The number of passengers on board an aircraft including local,
connecting and through passengers.(h)
    
    Block hours  The hours measured from the moment an aircraft first moves under its own power,
including taxi time, for the purposes of flight until the aircraft is docked at the next point
of landing and its power is shut down.(i)
    
    Average stage length  The average of the distances flown on each segment of every route.(j)
    
    Average passenger journey  The average one-way trip measured in miles for one passenger
origination. 53




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##### Table of Contents



Three Months Ended September 30, 2006
Compared with the
Three Months Ended September 30, 2005
    2006
    
    
    2005Operating expenses:Aircraft fuel and related taxes
    
    $
    256
    
    
    $
    224Loss (Gains) on fuel hedging instruments, net :Realized
    
    
    
    
    
    
    (29
    )Unrealized
    
    
    88
    
    
    
    (27
    )Salaries and related costs
    
    
    181
    
    
    
    178Aircraft rent
    
    
    85
    
    
    
    83Aircraft maintenance
    
    
    64
    
    
    
    72Other rent and landing fees
    
    
    38
    
    
    
    45Selling expenses
    
    
    40
    
    
    
    45Special items, net
    
    
    15
    
    
    
    84Depreciation and amortization
    
    
    12
    
    
    
    14Other
    
    
    89
    
    
    
    80Total mainline operating expenses
    
    
    868
    
    
    
    769Express expenses :Fuel
    
    
    60
    
    
    
    53Other
    
    
    100
    
    
    
    96Total operating expenses
    
    $
    1,028
    
    
    $
    918
  54




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##### Table of Contents



Percent2006
    
    
    2005
    
    
    changeAircraft fuel and related taxes
    
    
    3.38
    
    
    
    2.85
    
    
    
    18.6Gains on fuel hedging instruments, net
    
    
    1.17
    
    
    
    (0.71
    )
    
    nmSalaries and related costs
    
    
    2.40
    
    
    
    2.26
    
    
    
    6.2Aircraft rent
    
    
    1.12
    
    
    
    1.06
    
    
    
    5.7Aircraft maintenance
    
    
    0.84
    
    
    
    0.92
    
    
    
    (8.7
    )Other rent and landing fees
    
    
    0.50
    
    
    
    0.57
    
    
    
    (12.3
    )Selling expenses
    
    
    0.52
    
    
    
    0.57
    
    
    
    (8.8
    )Special items, net
    
    
    0.19
    
    
    
    1.07
    
    
    
    (82.2
    )Depreciation and amortization
    
    
    0.16
    
    
    
    0.18
    
    
    
    (11.1
    )Other
    
    
    1.19
    
    
    
    1.01
    
    
    
    17.811.47
    
    
    
    9.78
    
    
    
    17.4
  
    
    Aircraft fuel and related tax expense per ASM increased 18.6% primarily due to a 18.4%
increase in the average price per gallon of fuel to $2.27 in the third quarter of 2006 from
$1.92 in the comparable 2005 quarter.
    
    Salaries and related costs per ASM increased 6.2% primarily due to costs associated with
employee incentive plans, including $4 million recorded in the third quarter of 2006 for the
US Airways profit sharing plan.
    
    Aircraft rent expense per ASM increased 5.7% due principally to aircraft mix, as
previously leased Boeing 737-300 and Airbus A320 aircraft were returned to aircraft lessors
and replaced with leased Airbus A320 and A319 aircraft at higher monthly lease rates.
    
    Aircraft maintenance expense per ASM decreased 8.7% due primarily to timing as a higher
number of heavy maintenance checks occurred in the third quarter of 2005 as compared to
2006.
    
    Other rent and landing fees decreased 12.3% primarily due to efficiencies gained from the
sharing of rent costs with US Airways post merger.
    
    Selling expenses decreased 8.8% primarily due to favorable rates negotiated for credit
card processing.
    
    Depreciation and amortization expense per ASM decreased 11.1% due to the mix of leased to
owned aircraft as a result of sale-leaseback transactions in the third quarter of 2005.
    
    Other expenses increased 17.8% primarily due to an increase in expenses associated with
the frequent traveler program. In May 2006, the AWA FlightFund program merged with the US
Airways Dividend Miles program. The new combined Dividend Miles program offers access to
international routes operated by US Airways and Star Alliance members.
   55




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##### Table of Contents



Nine Months Ended September 30, 2006
Compared with the
Nine Months Ended September 30, 2005
    2006
    
    
    2005Operating expenses:Aircraft fuel and related taxes
    
    $
    703
    
    
    $
    584Loss (Gains) on fuel hedging instruments, net:Realized
    
    
    (12
    )
    
    
    (51
    )Unrealized
    
    
    44
    
    
    
    (73
    )Salaries and related costs
    
    
    547
    
    
    
    526Aircraft rent
    
    
    256
    
    
    
    241Aircraft maintenance
    
    
    188
    
    
    
    192Other rent and landing fees
    
    
    128
    
    
    
    132Selling expenses
    
    
    121
    
    
    
    126Special items, net
    
    
    8
    
    
    
    85Depreciation and amortization
    
    
    33
    
    
    
    37Other
    
    
    247
    
    
    
    244Total mainline operating expenses
    
    
    2,263
    
    
    
    2,043Express expenses:Fuel
    
    
    163
    
    
    
    129Other
    
    
    301
    
    
    
    266Total operating expenses
    
    $
    2,727
    
    
    $
    2,438
  56




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##### Table of Contents



Percent2006
    
    
    2005
    
    
    changeAircraft fuel and related taxes
    
    
    3.15
    
    
    
    2.55
    
    
    
    23.5Gains on fuel hedging instruments, net
    
    
    0.14
    
    
    
    (0.54
    )
    
    nmSalaries and related costs
    
    
    2.45
    
    
    
    2.29
    
    
    
    7.0Aircraft rent
    
    
    1.15
    
    
    
    1.05
    
    
    
    9.5Aircraft maintenance
    
    
    0.84
    
    
    
    0.84
    
    
    
    Other rent and landing fees
    
    
    0.57
    
    
    
    0.58
    
    
    
    (1.7
    )Selling expenses
    
    
    0.54
    
    
    
    0.55
    
    
    
    (1.8
    )Special items, net
    
    
    0.04
    
    
    
    0.37
    
    
    
    (89.2
    )Depreciation and amortization
    
    
    0.15
    
    
    
    0.16
    
    
    
    (6.3
    )Other
    
    
    1.10
    
    
    
    1.06
    
    
    
    3.810.13
    
    
    
    8.91
    
    
    
    13.7
  
    
    Aircraft fuel and related taxes per ASM increased 23.5% primarily due to a 24.0% increase
in the average price per gallon of fuel to $2.14 in the first nine months of 2006 from $1.72
in the comparable 2005 period.
    
    Salaries and related costs increased 7.0% primarily due to higher costs associated with
employee incentive plans, including $18 million recorded in the third quarter of 2006 for
the US Airways profit sharing plan.
    
    Aircraft rent expense per ASM increased 9.5% due principally to aircraft mix, as
previously leased Boeing 737-300 and Airbus A320 aircraft were returned to aircraft lessors
and replaced with leased Airbus A320 and A319 aircraft at higher monthly lease rates.
    
    Depreciation and amortization decreased 6.3% due to the mix of leased to owned aircraft
as a result of sale-leaseback transactions in the third quarter of 2005.
   US Airways Results of Operations
   57




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##### Table of Contents



Three Months Ended
    
    
    Percent
    
    
    Nine Months Ended
    
    
    PercentSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2006
    
    
    2005
    
    
    2006-2005
    
    
    2006
    
    
    2005
    
    
    2006-2005Revenue passenger miles (millions) (a)
    
    
    9,909
    
    
    
    10,255
    
    
    
    (3.4
    )
    
    
    28,116
    
    
    
    30,629
    
    
    
    (8.2
    )Available seat miles (millions) (b)
    
    
    12,589
    
    
    
    13,225
    
    
    
    (4.8
    )
    
    
    35,674
    
    
    
    40,228
    
    
    
    (11.3
    )Load factor (c)
    
    
    78.7
    
    
    
    77.5
    
    
    1.2
    pts
    
    
    78.8
    
    
    
    76.1
    
    
    2.7
    ptsYield (d)
    
    
    13.60
    
    
    
    12.41
    
    
    
    9.6
    
    
    
    14.03
    
    
    
    12.20
    
    
    
    15.0Passenger revenue per available seat mile (e)
    
    
    10.71
    
    
    
    9.63
    
    
    
    11.2
    
    
    
    11.06
    
    
    
    9.29
    
    
    
    19.0Cost per available seat mile (f)
    
    
    11.42
    
    
    
    10.76
    
    
    
    6.1
    
    
    
    11.52
    
    
    
    10.50
    
    
    
    9.7Passenger enplanements (thousands) (g)
    
    
    8,962
    
    
    
    10,110
    
    
    
    (11.4
    )
    
    
    27,088
    
    
    
    31,465
    
    
    
    (13.9
    )Aircraft at end of period
    
    
    224
    
    
    
    251
    
    
    
    (10.8
    )
    
    
    224
    
    
    
    251
    
    
    
    (10.8
    )Block hours (h)
    
    
    212,625
    
    
    
    232,797
    
    
    
    (8.7
    )
    
    
    612,279
    
    
    
    730,298
    
    
    
    (16.2
    )Average stage length (miles) (i)
    
    
    915
    
    
    
    802
    
    
    
    14.1
    
    
    
    875
    
    
    
    793
    
    
    
    10.4Average passenger journey (miles) (j)
    
    
    1,106
    
    
    
    1,014
    
    
    
    9.0
    
    
    
    1,038
    
    
    
    973
    
    
    
    6.6Gallons of aircraft fuel consumed (millions)
    
    
    205.7
    
    
    
    218.6
    
    
    
    (5.9
    )
    
    
    583.5
    
    
    
    663.2
    
    
    
    (12.0
    )Average aircraft fuel price including tax
(per gallon)
    
    
    2.25
    
    
    
    1.87
    
    
    
    20.4
    
    
    
    2.12
    
    
    
    1.68
    
    
    
    26.8Full time equivalent employees at end of
period
    
    
    19,180
    
    
    
    20,663
    
    
    
    (7.2
    )
    
    
    19,180
    
    
    
    20,663
    
    
    
    (7.2
    )
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. A RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. An ASM represents one seat flown
one mile.(c)
    
    Load factor  The percentage of available seats that are filled with revenue passengers.(d)
    
    Yield  A measure of airline revenue derived by dividing passenger revenue by revenue
passenger miles and expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Total passenger revenues divided by
total available seat miles.(f)
    
    Cost per available seat mile (CASM)  Total mainline operating expenses divided by total
available seat miles.(g)
    
    Passenger enplanements The number of passengers on board an aircraft including local,
connecting and through passengers.(h)
    
    Block hours  The hours measured from the moment an aircraft first moves under its own power,
including taxi time, for the purposes of flight until the aircraft is docked at the next point
of landing and its power is shut down.(i)
    
    Average stage length  The average of the distances flown on each segment of every route.(j)
    
    Average passenger journey  The average one-way trip measured in miles for one passenger
origination. Three Months Ended September 30, 2006
Compared with the
Three Months Ended September 30, 2005
  58




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##### Table of Contents



2006
    
    
    2005Operating expenses:Aircraft fuel and related taxes
    
    $
    464
    
    
    $
    409Salaries and related costs
    
    
    347
    
    
    
    332Aircraft rent
    
    
    96
    
    
    
    98Aircraft maintenance
    
    
    78
    
    
    
    90Other rent and landing fees
    
    
    108
    
    
    
    104Selling expenses
    
    
    81
    
    
    
    78Special items, net
    
    
    12
    
    
    
    Depreciation and amortization
    
    
    32
    
    
    
    46Other
    
    
    219
    
    
    
    266Total mainline operating expenses
    
    
    1,437
    
    
    
    1,423Express expenses
    
    
    523
    
    
    
    477Total operating expenses
    
    $
    1,960
    
    
    $
    1,900
   Percent2006
    
    
    2005
    
    
    changeAircraft fuel and related taxes
    
    
    3.69
    
    
    
    3.09
    
    
    
    19.4Salaries and related costs
    
    
    2.76
    
    
    
    2.51
    
    
    
    10.0Aircraft rent
    
    
    0.76
    
    
    
    0.74
    
    
    
    2.7Aircraft maintenance
    
    
    0.62
    
    
    
    0.68
    
    
    
    (8.8
    )Other rent and landing fees
    
    
    0.86
    
    
    
    0.79
    
    
    
    8.9Selling expenses
    
    
    0.64
    
    
    
    0.59
    
    
    
    8.5Special items, net
    
    
    0.10
    
    
    
    
    
    
    nmDepreciation and amortization
    
    
    0.25
    
    
    
    0.35
    
    
    
    (28.6
    )Other
    
    
    1.74
    
    
    
    2.01
    
    
    
    (13.4
    )11.42
    
    
    
    10.76
    
    
    
    6.1
  
    
    Aircraft fuel and related tax expense per ASM increased 19.4% primarily due to a 20.4%
increase in the average price per gallon of fuel from $1.87 in the third quarter of 2005 to
$2.25 in the third quarter of 2006.
 59




---



##### Table of Contents




    
    Salaries and related costs per ASM increased 10.0% primarily due to higher costs
associated with employee incentive plans, including $7 million recorded in the third quarter
of 2006 for the US Airways profit sharing plan, offset by reduced salaries and benefits for
lower headcount in the third quarter of 2006 as compared to the same period in 2005.
    
    Aircraft maintenance expense per ASM decreased by 8.8% from 0.68 cents to 0.62 cents due
to a higher number of engine overhauls in the 2005 period.
    
    Other rent and landing fees per ASM increased by 8.9% reflecting fixed costs associated
with space rent while ASMs decreased 4.8% as compared to the prior year.
    
    Selling expenses increased 8.5% per ASM mainly due to increased credit card fees
resulting from the 9.6% increase in yield.
    
    Depreciation and amortization decreased 28.6% per ASM as a result of fewer owned aircraft
in the operating fleet (see aircraft rent expense per ASM above) and lower book values on
the continuing fleet as a result of the application of fresh-start reporting.
    
    Other expenses per ASM decreased by 13.4% due to a reduction in legal fees incurred in
2005 related to the merger and other costs savings in 2006 from synergies resulting from the
merger.
   Nine Months Ended September 30, 2006
Compared with the
Nine Months Ended September 30, 2005
    60




---



##### Table of Contents



2006
    
    
    2005Operating expenses:Aircraft fuel and related taxes
    
    $
    1,239
    
    
    $
    1,111Salaries and related costs
    
    
    1,027
    
    
    
    1,073Aircraft rent
    
    
    290
    
    
    
    293Aircraft maintenance
    
    
    244
    
    
    
    253Other rent and landing fees
    
    
    304
    
    
    
    319Selling expenses
    
    
    227
    
    
    
    258Special items, net
    
    
    9
    
    
    
    Depreciation and amortization
    
    
    105
    
    
    
    152Other
    
    
    664
    
    
    
    763Total mainline operating expenses
    
    
    4,109
    
    
    
    4,222Express expenses
    
    
    1,556
    
    
    
    1,372Total operating expenses
    
    $
    5,665
    
    
    $
    5,594
   Percent2006
    
    
    2005
    
    
    changeAircraft fuel and related taxes
    
    
    3.47
    
    
    
    2.76
    
    
    
    25.7Salaries and related costs
    
    
    2.88
    
    
    
    2.67
    
    
    
    7.9Aircraft rent
    
    
    0.81
    
    
    
    0.73
    
    
    
    11.0Aircraft maintenance
    
    
    0.68
    
    
    
    0.63
    
    
    
    7.9Other rent and landing fees
    
    
    0.85
    
    
    
    0.79
    
    
    
    7.6Selling expenses
    
    
    0.64
    
    
    
    0.64
    
    
    
    Special items, net
    
    
    0.03
    
    
    
    
    
    
    nmDepreciation and amortization
    
    
    0.29
    
    
    
    0.38
    
    
    
    (23.7
    )Other
    
    
    1.87
    
    
    
    1.90
    
    
    
    (1.6
    )11.52
    
    
    
    10.50
    
    
    
    9.7
  
    
    Aircraft fuel and related tax expense per ASM increased 25.7% primarily due to a 26.8%
increase in the average price per gallon of fuel from $1.68 in the first nine months of 2005
to $2.12 in the first nine months of 2006.
    
    Salaries and related costs per ASM increased 7.9% primarily due to higher costs
associated with employee incentive plans, including $29 million recorded in the third
quarter of 2006 for the US Airways profit sharing plan, offset by reduced salaries and
benefits for lower headcount in the first nine months of 2006 as compared to the same period
in 2005.
    
    Aircraft rent expense per ASM increased 11.0% reflecting a shift in the mix of owned to
leased aircraft as a result of the sale-leaseback transactions in the second, third and
fourth quarters of 2005.
    
    Aircraft maintenance expense per ASM increased 7.9% reflecting the shift to outside
vendors in the second quarter of 2005 to perform scheduled maintenance, partially offsetting
the decrease in salaries and related costs described above.
    
    Other rent and landing fees per ASM increased 7.6% reflecting fixed costs associated with
space rent while ASMs decreased 11.3% as compared to the prior year.
    
    Depreciation and amortization decreased 23.7% per ASM as a result of fewer owned aircraft
in the operating fleet (see aircraft rent expense per ASM above) and lower book values on
the continuing fleet as a result of the application of fresh-start reporting.
  61




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##### Table of Contents



Liquidity and Capital Resources
 Sources and Uses of Cash
 US Airways Group
    AWA
   62




---



##### Table of Contents



US Airways
    Commitments
  Refinancing Transactions
    63




---



##### Table of Contents




    
    requires certain mandatory prepayments upon certain asset sales, including
sale-leasebacks, subject to US Airways Groups right to reinvest net sales proceeds in
qualified assets;
    
    provides for mandatory prepayments upon a change in control or collateral value
deficiencies;
    
    establishes certain financial covenants, subject to adjustment, including minimum cash
requirements (as described in more detail below), minimum ratios of earnings before
interest, taxes, depreciation, amortization and aircraft rent to fixed charges (except
during a covenant suspension period), and minimum ratios of collateral value to outstanding
principal;
    
    contains customary affirmative covenants and negative covenants (some of which are eased
during a covenant suspension period), including restrictions on liens, investments,
restricted payments, asset sales, acquisitions, changes in fiscal year, sale and leasebacks,
transactions with affiliates, conduct of business, mergers or consolidations, and amendments
to other indebtedness and certain other documents; and
    
    contains customary events of default, including payment defaults, cross-defaults, breach
of covenants, bankruptcy and insolvency defaults, judgment defaults and business
discontinuations (i.e., voluntary suspension of substantially all flights for two days).
   
    
    The amended and restated US Airways and AWA loans entered into on September 27, 2005 that
had previously been guaranteed by the ATSB. On October 19, 2005, $777 million of the loans,
of which $752 million had been guaranteed by the ATSB, was sold by the lenders by order of
the ATSB to 13 fixed income investors, removing the ATSB guarantee. At the time of repayment
of these loans on March 31, 2006, the total outstanding balance of the loans was $801
million, of which $551 million was outstanding under the US Airways loan and $250 million
was outstanding under the AWA loan.
    
    The $161 million loan entered into as of September 27, 2005 between US Airways and AWA
and Airbus Financial Services, for which US Airways Group was the guarantor. At the time of
repayment on March 31, 2006, the outstanding balance of the loan was $161 million. US
Airways and AWA also had an $89 million loan from Airbus Financial Services entered into as
of September 27, 2005. In accordance with the terms of the loan agreements, the outstanding
principal amount of the $89 million loan was to be forgiven in writing on the earlier of
December 31, 2010 or the date that the outstanding principal amount of, accrued interest on,
and all other amounts due under the Airbus $161 million loan were paid in full, provided
that the Company complies with the delivery schedule for certain Airbus aircraft. As a
result of the prepayment of the $161 million loan on March 31, 2006, the $89 million loan
agreement was terminated and the $89 million loan, of which $89 million was outstanding, was
forgiven.
    
    Two loans provided by GECC to AWA pursuant to loan agreements entered into as of
September 3, 2004 referred to as the Spare Parts Facility and the Engines Facility. At the
time of repayment, the principal amounts outstanding under the Spare Parts Facility and the
Engines Facility were $76 million and $34 million, respectively.
  Conversion of 7.5% Convertible Senior Notes due 2009
  64




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7% Senior Convertible Notes
     General Electric
  65




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Airbus Term Loans
  ATSB Loans
  
    
    90% of the US Airways loan (Tranche A), bore interest at a rate equal to the
conduit providers weighted average cost related to the issuance of certain commercial
paper notes and other short term borrowings plus 0.30%, provided that portions of
Tranche A that were held by the ATSB or by an assignee and no longer subject to such
commercial paper conduit program bore interest at LIBOR plus 40 basis points, and
portions of Tranche A that were under certain circumstances assigned free of the ATSB
guarantee bore interest at LIBOR plus 6.0%; and
    
    10% of the US Airways loan (Tranche B) bore interest at the greater of the
Tranche A interest rate plus 6.0% and LIBOR plus 6.0%.
     66




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Restructuring of Affinity Credit Card Partner Agreement
       Restructuring of Credit Card Processing Agreement
  67




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Asset Based Financings
  Embraer Purchase Commitments
  Bombardier Purchase Commitments
  Airbus Purchase Commitments
   68




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Covenants and Credit Rating
   Off-Balance Sheet Arrangements
   Other Indebtedness and Obligations
  Payments Due by Period2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    TotalUS Airways Group (1)Debt (2)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,372
    
    
    $
    1,372Aircraft related and other commitments
    
    
    9
    
    
    
    36
    
    
    
    36
    
    
    
    34
    
    
    
    48
    
    
    
    1,668
    
    
    
    1,831US Airways (3)Debt and capital lease obligations
    
    
    11
    
    
    
    88
    
    
    
    85
    
    
    
    74
    
    
    
    78
    
    
    
    1,005
    
    
    
    1,341Aircraft purchase and operating lease commitments
    
    
    188
    
    
    
    950
    
    
    
    1,076
    
    
    
    860
    
    
    
    1,012
    
    
    
    3,940
    
    
    
    8,026Regional capacity purchase agreements
    
    
    143
    
    
    
    604
    
    
    
    616
    
    
    
    628
    
    
    
    641
    
    
    
    2,917
    
    
    
    5,549AWA (3)Debt and capital lease obligations
    
    
    2
    
    
    
    29
    
    
    
    111
    
    
    
    139
    
    
    
    81
    
    
    
    29
    
    
    
    391Aircraft purchase and operating lease commitments
    
    
    65
    
    
    
    421
    
    
    
    617
    
    
    
    842
    
    
    
    291
    
    
    
    1,830
    
    
    
    4,066Regional capacity purchase agreements
    
    
    137
    
    
    
    580
    
    
    
    592
    
    
    
    603
    
    
    
    606
    
    
    
    945
    
    
    
    3,463Other US Airways Group subsidiaries (4)
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Total
    
    $
    557
    
    
    $
    2,710
    
    
    $
    3,134
    
    
    $
    3,180
    
    
    $
    2,757
    
    
    $
    13,706
    
    
    $
    26,044
 
 (1)
    
    These commitments represent those specifically entered into by US Airways Group or joint
commitments entered into by US Airways Group, AWA and US Airways under which each entity is
jointly and severally liable. 69




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(2)
    
    Includes $123 million aggregate principal amount of 7% senior convertible notes due 2020
issued by US Airways Group and the $1.25 billion GE Loan due March 31, 2011.(3)
    
    Commitments listed separately under US Airways or AWA represent commitments under agreements
entered into separately by those companies.(4)
    
    Represents operating lease commitments entered into by US Airways Groups other airline
subsidiaries Piedmont and PSA.  Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
    70




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk Sensitive Instruments
  Commodity price risk
   Interest rate risk
  
 71




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Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures.
  Changes in internal control over financial reporting.
  Limitation on the effectiveness of controls.
  72




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Part II. Other Information
 
 Item 1. Legal Proceedings
     73




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74




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Item 1A. Risk Factors
 Risk Factors Relating to the Company and Industry Related Risks
  Our business is dependent on the price and availability of aircraft fuel. Continued periods of
historically high fuel costs, significant disruptions in the supply of aircraft fuel or significant
further increases in fuel costs could have a significant negative impact on our operating results.
  Our high level of fixed obligations limits our ability to fund general corporate requirements and
obtain additional financing, limits our flexibility in responding to competitive developments and
increases our vulnerability to adverse economic and industry conditions.
  
    
    A decrease in revenues results in a disproportionately greater percentage decrease in earnings.
    
    We may not have sufficient liquidity to fund all of these fixed costs if our revenues decline or costs increase.
    
    We may have to use our working capital to fund these fixed costs instead of funding
general corporate requirements, including capital expenditures.
    
    We may not have sufficient liquidity to respond to competitive developments and adverse
economic conditions.
 75




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We may not fully realize the synergies anticipated by the merger.
  The integration of US Airways Group and America West Holdings following the merger continues to
present significant challenges.
  Union disputes, employee strikes and other labor-related disruptions may adversely affect our
operations.
   76




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We rely heavily on automated systems to operate our business and any failure of these systems, or
the failure to integrate them successfully following the merger, could harm our business.
   Our future growth is dependent on obtaining adequate operating facilities at airports throughout
our network.
  The travel industry continues to face ongoing security concerns.
  US Airways Group could experience significant operating losses in the future.
   77




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Fluctuations in interest rates could adversely affect our liquidity, operating expenses and
results.
  If we incur problems with any of our third party service providers, our operations could be
adversely affected by a resulting decline in revenue or negative public perception about our
services.
  Increases in insurance costs or reductions in insurance coverage may adversely impact our
operations and financial results.
  Changes in government regulation could increase our operating costs and limit our ability to
conduct our business.
  78




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The use of America West Holdings and US Airways Groups respective pre-merger NOLs and certain
other tax attributes is limited following the merger.
  The airline industry is intensely competitive.
  Certain liabilities were not fully extinguished as a result of confirmation of the plan of
reorganization.
  Interruptions or disruptions in service at one of our hub airports could have a material adverse
impact on our operations.
  We are at risk of losses and adverse publicity stemming from any accident involving any of our
aircraft.
  Our business is subject to weather factors and seasonal variations in airline travel, which cause
our results to fluctuate.
  79




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Employee benefit plans represent significant continuing costs to the sponsoring employers.
  Risks Related to Our Common Stock
 Our common stock has limited trading history and its market price may be volatile.
  
    
    our operating results failing to meet the expectations of securities analysts or investors;
    
    changes in financial estimates or recommendations by securities analysts;
    
    material announcements by us or our competitors;
    
    movements in fuel prices;
    
    new regulatory pronouncements and changes in regulatory guidelines;
    
    general and industry-specific economic conditions;
    
    public sales of a substantial number of shares of our common stock; and
    
    general market conditions.
 Conversion of our convertible notes will dilute the ownership interest of existing stockholders and
could adversely affect the market price of our common stock.
  A small number of stockholders beneficially own a substantial amount of our common stock.
  80




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Certain provisions of the amended and restated certificate of incorporation and amended and
restated bylaws of US Airways Group make it difficult for stockholders to change the composition of
our board of directors and may discourage takeover attempts that some of our stockholders might
consider beneficial.
  
    
    a classified board of directors with three-year staggered terms;
    
    advance notice procedures for stockholder proposals to be considered at stockholders meetings;
    
    the ability of US Airways Groups board of directors to fill vacancies on the board;
    
    a prohibition against stockholders taking action by written consent;
    
    a prohibition against stockholders calling special meetings of stockholders;
    
    a requirement that holders of at least 80% of the voting power of the shares entitled to
vote in the election of directors approve amendment of the amended and restated bylaws; and
    
    super-majority voting requirements to modify or amend specified provisions of US Airways
Groups amended and restated certificate of incorporation.
  Our charter documents include provisions limiting voting and ownership by foreign owners.
  81




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Item 6. Exhibits
 Exhibit No.
    
    Description10.1
    
    Amendment No. 14, dated as of August 24, 2006, to the Airbus A319/A320 Purchase
Agreement, dated as of September 12, 1997, between AVSA, S.A.R.L. and America West
Airlines, Inc.*10.2
    
    Amendment No. 15, dated as of August 24, 2006, to the Airbus A319/A320 Purchase
Agreement, dated as of September 12, 1997, between AVSA, S.A.R.L. and America West
Airlines, Inc.*10.3
    
    Amendment No. 16, dated as of August 24, 2006, to the Airbus A319/A320 Purchase
Agreement, dated as of September 12, 1997, between AVSA, S.A.R.L. and America West
Airlines, Inc., including Letter Agreement No. 3A thereto.*10.4
    
    Amendment No. 17, dated as of August 24, 2006, to the A319/A320/A321 Purchase
Agreement, dated as of October 31, 1997, between US Airways Group, Inc. and AVSA,
S.A.R.L.*31.1
    
    Certification of US Airways Groups Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of US Airways Groups Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.31.3
    
    Certification of AWAs Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.31.4
    
    Certification of AWAs Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.31.5
    
    Certification of US Airways Chief Executive Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.31.6
    
    Certification of US Airways Chief Financial Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.32.1
    
    Certification of US Airways Groups Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of AWAs Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.3
    
    Certification of US Airways Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Portions of this exhibit have been omitted under a request for confidential treatment and
filed separately with the United States Securities and Exchange Commission 82




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Signatures
  US Airways Group, Inc. (Registrant)Date: October 26, 2006
    By:
    /s/ Derek J. KerrDerek J. KerrSenior Vice President and Chief Financial Officer America West Airlines, Inc. (Registrant)Date: October 26, 2006
    By:
    /s/ Derek J. KerrDerek J. KerrSenior Vice President and Chief Financial Officer US Airways, Inc. (Registrant)Date: October 26, 2006
    By:
    /s/ Derek J. KerrDerek J. KerrSenior Vice President and Chief Financial Officer 83




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Exhibit Index
 Exhibit No.
    
    Description10.1
    
    Amendment No. 14, dated as of August 24, 2006, to the Airbus A319/A320 Purchase
Agreement, dated as of September 12, 1997, between AVSA, S.A.R.L. and America West
Airlines, Inc.*10.2
    
    Amendment No. 15, dated as of August 24, 2006, to the Airbus A319/A320 Purchase
Agreement, dated as of September 12, 1997, between AVSA, S.A.R.L. and America West
Airlines, Inc.*10.3
    
    Amendment No. 16, dated as of August 24, 2006, to the Airbus A319/A320 Purchase
Agreement, dated as of September 12, 1997, between AVSA, S.A.R.L. and America West
Airlines, Inc., including Letter Agreement No. 3A thereto.*10.4
    
    Amendment No. 17, dated as of August 24, 2006, to the A319/A320/A321 Purchase
Agreement, dated as of October 31, 1997, between US Airways Group, Inc. and AVSA,
S.A.R.L.*31.1
    
    Certification of US Airways Groups Chief Executive Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of US Airways Groups Chief Financial Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.31.3
    
    Certification of AWAs Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.31.4
    
    Certification of AWAs Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.31.5
    
    Certification of US Airways Chief Executive Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934, as amended.31.6
    
    Certification of US Airways Chief Financial Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934, as amended.32.1
    
    Certification of US Airways Groups Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of AWAs Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.3
    
    Certification of US Airways Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Portions of this exhibit have been omitted under a request for confidential treatment and
filed separately with the United States Securities and Exchange Commission 84