##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

|  |  |                                                                                                                                              
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|x |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002 or

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

For the transition period from     to

Commission file number         1-12649

AMERICA WEST HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)


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

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

Registrants telephone number, including area code (480) 693-0800

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

AMERICA WEST AIRLINES, INC.

(Exact name of registrant as specified in its charter)


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

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

Registrants telephone number, including area code       (480) 693-0800

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

Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes   XX     No

As of October 17, 2002, America West Holdings Corporation has 941,431 shares of
class A common stock and 32,781,951 shares of class B common stock outstanding.
As of October 17, 2002, America West Airlines, Inc. has 1,000 shares of class
B common stock outstanding, all of which are held by America West Holdings
Corporation.





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TABLE OF CONTENTS



|                                                                                       |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                                                        
|                                                                                       | ITEM 1A. CONSOLIDATED FINANCIAL STATEMENTS  AMERICA WEST HOLDINGS CORPORATION               
|AMERICA WEST HOLDINGS CORPORATION Notes to Condensed Consolidated Financial Statements
|                                                                                       | ITEM 1B. FINANCIAL STATEMENTS  AMERICA WEST AIRLINES, INC.                                  
|AMERICA WEST AIRLINES, INC. Notes to Condensed Financial Statements                   
|                                                                                       | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                                       | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                                                       | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II  OTHER INFORMATION                                                           
|                                                                                       | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                                                                       | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURE                                                                             
|Exhibit Index                                                                         
|EX-99.1                                                                               
|EX-99.2                                                                               
|EX-99.3                                                                               
|EX-99.4                                                                               



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##### Table of Contents






PART I  FINANCIAL INFORMATION




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

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

|                        |                                                                                 |                      |                            |         |               |         |              |           |         |         | 
|----------------------- | ------------------------------------------------------------------------------- | -------------------- | -------------------------- | ------- | ------------- | ------- | ------------ | --------- | ------- | ------- | 
|                        |                                                                                 |                      |                            |         | September 30, |         | December 31,
|                        |                                                                                 |                      |                            |         | 2002          |         | 2001        
|                        |                                                                                 |                      |                            |         |               |         |             
|Assets                  |                                                                                 | (Unaudited)          |                            |         |               |        
|Current assets:         |                                                                                 |                      |                            |         |               |         |              |          
|                       
|                       
|                       
|                       
|                        | Cash and cash equivalents                                                       |                      | $                          | 381,935 |               |         | $            | 156,865   |        
|                       
|                       
|                       
|                       
|                        | Short-term investments                                                          |                      |                            | 40,023  |               |         |              |          |        
|                       
|                       
|                       
|                       
|                        | Accounts receivable, net                                                        |                      |                            | 97,551  |               |         |              | 109,012   |        
|                       
|                       
|                       
|                       
|                        | Expendable spare parts and supplies, net                                        |                      |                            | 56,139  |               |         |              | 51,833    |        
|                       
|                       
|                       
|                       
|                        | Prepaid expenses                                                                |                      |                            | 92,681  |               |         |              | 43,688    |        
|                        |                                                                                 |                      |                            |         |               |         |              |          
|                        |                                                                                 | Total current assets |                            |         | 668,329       |         |              |           | 361,398 |        
|                        |                                                                                 |                      |                            |         |               |         |              |          
|Property and equipment: |                                                                                 |                      |                            |         |               |         |              |          
|                       
|                       
|                       
|                       
|                        | Flight equipment                                                                |                      |                            | 988,863 |               |         |              | 1,082,649 |        
|                       
|                       
|                       
|                       
|                        | Other property and equipment                                                    |                      |                            | 269,906 |               |         |              | 258,400   |        
|                       
|                       
|                       
|                       
|                        | Equipment purchase deposits                                                     |                      |                            | 49,650  |               |         |              | 49,650    |        
|                        |                                                                                 |                      |                            |         |               |         |              |          
|                        |                                                                                 |                      | 1,308,419                  |         |               |         | 1,390,699    |          
|                       
|                       
|                       
|                       
|                        | Less accumulated depreciation and amortization                                  |                      |                            | 643,823 |               |         |              | 564,796   |        
|                        |                                                                                 |                      |                            |         |               |         |              |          
|                        |                                                                                 |                      | Net property and equipment |         |               | 664,596 |              |           |         | 825,903 | 
|                        |                                                                                 |                      |                            |         |               |         |              |          
|Other assets:           |                                                                                 |                      |                            |         |               |         |              |          
|                       
|                       
|                       
|                       
|                        | Restricted cash                                                                 |                      |                            | 53,199  |               |         |              | 54,546    |        
|                       
|                       
|                       
|                       
|                        | Reorganization value in excess of amounts allocable to
identifiable assets, net |                      |                            |        |               |         |              | 272,283   |        
|                       
|                       
|                       
|                       
|                        | Deferred tax asset, net                                                         |                      |                            | 38,519  |               |         |              |          |        
|                       
|                       
|                       
|                       
|                        | Other assets, net                                                               |                      |                            | 149,300 |               |         |              | 56,779    |        
|                        |                                                                                 |                      |                            |         |               |         |              |          
|                        |                                                                                 | Total other assets   |                            |         | 241,018       |         |              |           | 383,608 |        
|                        |                                                                                 |                      |                            |         |               |         |              |          
|                        |                                                                                 | $                    | 1,573,943                  |         |               | $       | 1,570,909    |          
|                        |                                                                                 |                      |                            |         |               |         |              |           |        

See accompanying notes to condensed consolidated financial statements.

2



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##### Table of Contents



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

|                                        |                                                                                                                                                                                |                            |           |               |         |              |           |          |         | 
|--------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | ------------- | ------- | ------------ | --------- | -------- | ------- | 
|                                        |                                                                                                                                                                                |                            |           | September 30, |         | December 31,
|                                        |                                                                                                                                                                                |                            |           | 2002          |         | 2001        
|                                        |                                                                                                                                                                                |                            |           |               |         |             
|Liabilities and Stockholders' Equity    |                                                                                                                                                                                | (Unaudited)                |           |               |         |             
|Current liabilities:                    |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                       
|                                       
|                                       
|                                       
|                                        | Current maturities of long-term debt                                                                                                                                           |                            | $         | 23,456        |         |              | $         | 119,141  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                                                                                                                               |                            |           | 186,997       |         |              |           | 253,318  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Air traffic liability                                                                                                                                                          |                            |           | 227,061       |         |              |           | 187,714  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued compensation and vacation benefits                                                                                                                                     |                            |           | 43,446        |         |              |           | 41,470   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued taxes                                                                                                                                                                  |                            |           | 38,639        |         |              |           | 59,240   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other accrued liabilities                                                                                                                                                      |                            |           | 37,558        |         |              |           | 29,643   |        
|                                        |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                        |                                                                                                                                                                                | Total current liabilities  |           |               | 557,157 |              |           |          | 690,526 | 
|                                        |                                                                                                                                                                                |                            |           |               |         |              |           |         
|Long-term debt, less current maturities |                                                                                                                                                                                |                            | 708,739   |               |         |              | 222,955   |         
|                                       
|                                       
|                                       
|                                       
|Deferred credits and other liabilities  |                                                                                                                                                                                |                            | 146,149   |               |         |              | 133,779   |         
|                                       
|                                       
|                                       
|                                       
|Deferred tax liability, net             |                                                                                                                                                                                |                            |          |               |         |              | 1,306     |         
|                                       
|                                       
|                                       
|                                       
|Commitments and contingencies           |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                       
|                                       
|                                       
|                                       
|Stockholders equity:                   |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                       
|                                       
|                                       
|                                       
|                                        | Preferred stock, $.01 par value. Authorized 48,800,000
shares; no shares issued                                                                                                |                            |           |              |         |              |           |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Class A common stock, $.01 par value. Authorized
1,200,000 shares; issued and outstanding 941,431 shares at
September 30, 2002 and December 31, 2001                           |                            |           | 9             |         |              |           | 9        |        
|                                       
|                                       
|                                       
|                                       
|                                        | Class B common stock, $.01 par value. Authorized 100,000,000
shares; issued and outstanding 49,065,846 shares at September 30,
2002 and 49,070,346 shares at December 31, 2001 |                            |           | 491           |         |              |           | 491      |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                                                                                                                     |                            |           | 629,019       |         |              |           | 593,784  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings (deficit)                                                                                                                                                    |                            |           | (164,874      | )       |              |           | 232,875  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive income                                                                                                                                         |                            |           | 3,459         |         |              |           | 1,390    |        
|                                        |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                        |                                                                                                                                                                                |                            | 468,104   |               |         |              | 828,549   |         
|                                       
|                                       
|                                       
|                                       
|                                        | Less: Cost of class B common stock in treasury, 16,283,895
shares at September 30, 2002 and December 31, 2001                                                                  |                            |           | (306,206      | )       |              |           | (306,206 | )      
|                                        |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                        |                                                                                                                                                                                | Total stockholders equity |           |               | 161,898 |              |           |          | 522,343 | 
|                                        |                                                                                                                                                                                |                            |           |               |         |              |           |         
|                                        |                                                                                                                                                                                | $                          | 1,573,943 |               |         | $            | 1,570,909 |         
|                                        |                                                                                                                                                                                |                            |           |               |         |              |           |          |        

See accompanying notes to condensed consolidated financial statements.

3



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##### Table of Contents



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

|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |           | 
|-------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------------------------- | ------- | ------------------ | ------- | ----------------- | ------- | ------- | ------- | ---- | -------- | --------- | --------- | - | -------- | --------- | --------- | 
|                                                                                       |                                                                 |                                           |         | Three Months Ended |         | Nine Months Ended
|                                                                                       |                                                                 |                                           |         | September 30,      |         | September 30,    
|                                                                                       |                                                                 |                                           |         |                    |         |                  
|                                                                                       |                                                                 |                                           |         | 2002               |         | 2001              |         | 2002    |         | 2001
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |     
|Operating revenues:                                                                    |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Passenger                                                       |                                           | $       | 489,327            |         |                   | $       | 463,345 |         |      | $        | 1,433,611 |           |   | $        | 1,563,539 |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Cargo                                                           |                                           |         | 6,045              |         |                   |         | 7,839   |         |      |          | 20,620    |           |   |          | 27,599    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other                                                           |                                           |         | 24,979             |         |                   |         | 20,171  |         |      |          | 70,557    |           |   |          | 74,889    |          
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|                                                                                       |                                                                 | Total operating revenues                  |         |                    | 520,351 |                   |         |         | 491,355 |      |          |           | 1,524,788 |   |          |           | 1,666,027 | 
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Operating expenses:                                                                    |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Salaries and related costs                                      |                                           |         | 155,100            |         |                   |         | 156,414 |         |      |          | 443,669   |           |   |          | 452,731   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Aircraft rents                                                  |                                           |         | 76,548             |         |                   |         | 88,529  |         |      |          | 220,057   |           |   |          | 265,409   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other rents and landing fees                                    |                                           |         | 39,904             |         |                   |         | 34,596  |         |      |          | 119,716   |           |   |          | 104,785   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Aircraft fuel                                                   |                                           |         | 81,673             |         |                   |         | 85,778  |         |      |          | 213,209   |           |   |          | 278,677   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Agency commissions                                              |                                           |         | 8,357              |         |                   |         | 16,461  |         |      |          | 33,114    |           |   |          | 62,017    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Aircraft maintenance materials and repairs                      |                                           |         | 57,726             |         |                   |         | 67,399  |         |      |          | 186,521   |           |   |          | 197,867   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Depreciation and amortization                                   |                                           |         | 18,946             |         |                   |         | 16,591  |         |      |          | 53,331    |           |   |          | 46,662    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Amortization of excess reorganization value                     |                                           |         |                   |         |                   |         | 4,974   |         |      |          |          |           |   |          | 14,922    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Special charges                                                 |                                           |         | (2,000             | )       |                   |         |        |         |      |          | 58,255    |           |   |          | 35,695    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other                                                           |                                           |         | 124,264            |         |                   |         | 119,530 |         |      |          | 358,353   |           |   |          | 384,198   |          
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|                                                                                       |                                                                 | Total operating expenses                  |         |                    | 560,518 |                   |         |         | 590,272 |      |          |           | 1,686,225 |   |          |           | 1,842,963 | 
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Operating loss                                                                         |                                                                 |                                           | (40,167 | )                  |         |                   | (98,917 | )       |         |      | (161,437 | )         |           |   | (176,936 | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Nonoperating income (expenses):                                                        |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Interest income                                                 |                                           |         | 2,427              |         |                   |         | 3,849   |         |      |          | 8,468     |           |   |          | 11,370    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Interest expense, net                                           |                                           |         | (17,887            | )       |                   |         | (9,586  | )       |      |          | (55,018   | )         |   |          | (20,005   | )        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Federal government assistance                                   |                                           |         | 6,202              |         |                   |         | 60,282  |         |      |          | 8,466     |           |   |          | 60,282    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other, net                                                      |                                           |         | (157               | )       |                   |         | (2,389  | )       |      |          | (2,449    | )         |   |          | (2,265    | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|                                                                                       |                                                                 | Total nonoperating income (expenses), net |         |                    | (9,415  | )                 |         |         | 52,156  |      |          |           | (40,533   | ) |          |           | 49,382    | 
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Loss before income tax benefit and cumulative effect of change
in accounting principle |                                                                 |                                           | (49,582 | )                  |         |                   | (46,761 | )       |         |      | (201,970 | )         |           |   | (127,554 | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Income tax benefit                                                                     |                                                                 |                                           | (18,592 | )                  |         |                   | (15,082 | )       |         |      | (76,505  | )         |           |   | (40,555  | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Loss before cumulative effect of change in accounting principle                        |                                                                 |                                           | (30,990 | )                  |         |                   | (31,679 | )       |         |      | (125,465 | )         |           |   | (86,999  | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Cumulative effect of change in accounting principle                                    |                                                                 |                                           |        |                    |         |                   |        |         |         |      | (272,284 | )         |           |   |         |          
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Net loss                                                                               |                                                                 | $                                         | (30,990 | )                  |         | $                 | (31,679 | )       |         | $    | (397,749 | )         |           | $ | (86,999  | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Basic loss per share:                                                                  |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Loss before cumulative effect of change in accounting principle |                                           | $       | (0.92              | )       |                   | $       | (0.94   | )       |      | $        | (3.72     | )         |   | $        | (2.59     | )        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Cumulative effect of change in accounting principle             |                                           |         |                   |         |                   |         |        |         |      |          | (8.07     | )         |   |          |          |          
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|                                                                                       | Basic loss per share                                            |                                           | $       | (0.92              | )       |                   | $       | (0.94   | )       |      | $        | (11.79    | )         |   | $        | (2.59     | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Diluted loss per share:                                                                |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Loss before cumulative effect of change in accounting principle |                                           | $       | (0.92              | )       |                   | $       | (0.94   | )       |      | $        | (3.72     | )         |   | $        | (2.59     | )        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Cumulative effect of change in accounting principle             |                                           |         |                   |         |                   |         |        |         |      |          | (8.07     | )         |   |          |          |          
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|                                                                                       | Diluted loss per share                                          |                                           | $       | (0.92              | )       |                   | $       | (0.94   | )       |      | $        | (11.79    | )         |   | $        | (2.59     | )        
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|Shares used for computation:                                                           |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Basic                                                           |                                           |         | 33,723             |         |                   |         | 33,691  |         |      |          | 33,726    |           |   |          | 33,653    |          
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          
|                                                                                       | Diluted                                                         |                                           |         | 33,723             |         |                   |         | 33,691  |         |      |          | 33,726    |           |   |          | 33,653    |          
|                                                                                       |                                                                 |                                           |         |                    |         |                   |         |         |         |      |          |           |           |   |          |           |          

See accompanying notes to condensed consolidated financial statements.

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AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

|                                                                   |                                                              |                                                     |         |                   |         |      |         |          |          |  
|------------------------------------------------------------------ | ------------------------------------------------------------ | --------------------------------------------------- | ------- | ----------------- | ------- | ---- | ------- | -------- | -------- | -
|                                                                   |                                                              |                                                     |         | Nine Months Ended
|                                                                   |                                                              |                                                     |         | September 30,    
|                                                                   |                                                              |                                                     |         |                  
|                                                                   |                                                              |                                                     |         | 2002              |         | 2001
|                                                                   |                                                              |                                                     |         |                   |         |     
|Net cash provided by operating activities                          |                                                              | $                                                   | 793     |                   |         | $    | 117,804 |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Cash flows from investing activities:                              |                                                              |                                                     |         |                   |         |      |         |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Purchases of property and equipment                          |                                                     |         | (117,816          | )       |      |         | (450,257 | )       
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Sales (purchases) of short-term investments                  |                                                     |         | (40,023           | )       |      |         | 39,566   |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Proceeds from sale and leaseback of aircraft and engines     |                                                     |         | 175,478           |         |      |         | 74,000   |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Equipment purchase deposits and other                        |                                                     |         | 90                |         |      |         | 14,723   |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   |                                                              | Net cash provided by (used in) investing activities |         |                   | 17,729  |      |         |          | (321,968 | )
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|Cash flows from financing activities:                              |                                                              |                                                     |         |                   |         |      |         |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Repayment of debt                                            |                                                     |         | (191,702          | )       |      |         | (125,190 | )       
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Proceeds from issuance of debt                               |                                                     |         | 435,386           |         |      |         | 326,422  |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Payment of debt issue costs                                  |                                                     |         | (36,987           | )       |      |         |         |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Other                                                        |                                                     |         | (149              | )       |      |         | (7,838   | )       
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   |                                                              | Net cash provided by financing activities           |         |                   | 206,548 |      |         |          | 193,394  |  
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|Net increase (decrease) in cash and cash equivalents               |                                                              |                                                     | 225,070 |                   |         |      | (10,770 | )       
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Cash and cash equivalents at beginning of period                   |                                                              |                                                     | 156,865 |                   |         |      | 144,138 |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|Cash and cash equivalents at end of period                         |                                                              | $                                                   | 381,935 |                   |         | $    | 133,368 |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|Cash, cash equivalents and short-term investments at end of period |                                                              | $                                                   | 421,958 |                   |         | $    | 144,488 |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|Cash paid (refunded) for:                                          |                                                              |                                                     |         |                   |         |      |         |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Interest, net of amounts capitalized                         |                                                     | $       | 20,005            |         |      | $       | 12,365   |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   | Income taxes paid (refunded)                                 |                                                     | $       | (63,269           | )       |      | $       | 145      |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|Non-cash investing and financing activities:                       |                                                              |                                                     |         |                   |         |      |         |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Issuance of convertible notes, net of cancellations          |                                                     | $       | 60,186            |         |      | $       |         |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   | Issuance of warrants                                         |                                                     | $       | 35,383            |         |      | $       |         |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   | Equipment acquired through capital lease                     |                                                     | $       | 16,878            |         |      | $       |         |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   | Equipment acquired with issuance of notes payable            |                                                     | $       | 64,163            |         |      | $       |         |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   | Notes payable canceled under the aircraft purchase agreement |                                                     | $       | (10,500           | )       |      | $       | (29,750  | )       
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   | Notes payable issued for equipment purchase deposits         |                                                     | $       | 10,500            |         |      | $       | 10,500   |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         
|                                                                   | Payment in kind notes issued, net of returns                 |                                                     | $       | 3,810             |         |      | $       |         |         
|                                                                   |                                                              |                                                     |         |                   |         |      |         |         

See accompanying notes to condensed consolidated financial statements.

5



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##### Table of Contents






AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 2002

1. BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements include the
accounts of America West Holdings Corporation (Holdings or the Company) and
its wholly owned subsidiaries, America West Airlines, Inc. (AWA) and The
Leisure Company (TLC). These statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission and, in
accordance with those rules and regulations, certain information and footnotes
required by generally accepted accounting principles have been omitted. In the
opinion of management, the condensed consolidated financial statements reflect
all adjustments, which are of a normal recurring nature, necessary for a fair
presentation. Certain prior year amounts have been reclassified to conform
with current year presentation. The accompanying condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and related notes thereto included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2001.

2. LETTER OF CREDIT FACILITY

In July 2002, AWA received approximately $17.6 million that had been held
as cash collateral to secure a $20 million letter of credit facility. The
letter of credit facility was terminated after having been replaced with new
letters of credit prior to June 30, 2002. The $17.6 million reduced the
balance of restricted cash with a corresponding increase in unrestricted cash
and cash equivalents in the third quarter of 2002. During the third quarter of
2002, AWA also issued new letters of credit resulting in a net decrease in
restricted cash of approximately $11.2 million during the quarter.

3. FLIGHT EQUIPMENT

In September 2002, two aircraft lessors exercised their put rights under
their aircraft lease agreements to extend the leases for two Airbus A320
aircraft for an additional 12 months each.

4. TERM LOAN PAYMENT

In July 2002, AWA made a mandatory repayment of approximately $16.7
million on its $89.9 million term loan. The payment was made as a result of a
decrease in the fair market value of the assets securing the loan following the
terrorist attacks of September 11, 2001. Collateral for the loan consists of
aircraft, spare engines, rotable aircraft parts inventory and a maintenance
facility. AWA and the lenders also amended certain provisions in the loan
agreement related to the collateral appraisal procedures.

5. COMPREHENSIVE LOSS

Comprehensive loss includes unrealized gains and losses on
available-for-sale securities and changes in the fair value of derivative
financial instruments that qualify for hedge accounting. For the three months
ended September 30, 2002 and 2001, the Company recorded a total comprehensive
loss of $27.1 million and $30.5 million, respectively. For the nine months
ended September 30, 2002 and 2001, the Company recorded a total comprehensive
loss of $395.7 million and $85.6 million, respectively. The difference between
net loss and comprehensive loss for the three and nine months ended September
30, 2002 and 2001 is detailed in the following table:

6



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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 2002

|                   |                                                                                                                                  |   |                    |       |                   |   |                |        |      |   |          |        |   |   |         |        |  
|------------------ | -------------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | ----- | ----------------- | - | -------------- | ------ | ---- | - | -------- | ------ | - | - | ------- | ------ | -
|                   |                                                                                                                                  |   | Three Months Ended |       | Nine Months Ended
|                   |                                                                                                                                  |   | September 30,      |       | September 30,    
|                   |                                                                                                                                  |   |                    |       |                  
|                   |                                                                                                                                  |   | 2002               |       | 2001              |   | 2002           |        | 2001
|                   |                                                                                                                                  |   |                    |       |                   |   |                |        |     
|                   |                                                                                                                                  |   |                    |       |                   |   | (In thousands) |        |      |   |         
|Net loss           |                                                                                                                                  | $ | (30,990            | )     |                   | $ | (31,679        | )      |      | $ | (397,749 | )      |   | $ | (86,999 | )     
|                   |                                                                                                                                  |   |                    |       |                   |   |                |        |      |   |          |        |   |   |         |       
|                  
|                  
|                  
|                  
|                   | Unrealized gains (losses) on derivative
instruments, net of deferred taxes                                                       |   |                    | 3,940 |                   |   |                | (3,683 | )    |   |          | 3,459  |   |   |         | (1,727 | )
|                  
|                  
|                  
|                  
|                   | Reclassification adjustment to net loss of
previously reported unrealized gains (losses)
on derivative instruments, net of taxes |   |                    |      |                   |   |                | 3,592  |      |   |          | (1,390 | ) |   |         | 1,970  |  
|                  
|                  
|                  
|                  
|                   | Unrealized losses on marketable equity
securities, net of deferred taxes                                                         |   |                    |      |                   |   |                | (23    | )    |   |          |       |   |   |         | (199   | )
|                  
|                  
|                  
|                  
|                   | Realized losses on marketable equity securities,
net of taxes                                                                    |   |                    |      |                   |   |                | 1,307  |      |   |          |       |   |   |         | 1,307  |  
|                   |                                                                                                                                  |   |                    |       |                   |   |                |        |      |   |          |        |   |   |         |       
|                   | Total other comprehensive income (loss)                                                                                          |   |                    | 3,940 |                   |   |                | 1,193  |      |   |          | 2,069  |   |   |         | 1,351  |  
|                   |                                                                                                                                  |   |                    |       |                   |   |                |        |      |   |          |        |   |   |         |       
|Comprehensive loss |                                                                                                                                  | $ | (27,050            | )     |                   | $ | (30,486        | )      |      | $ | (395,680 | )      |   | $ | (85,648 | )     
|                   |                                                                                                                                  |   |                    |       |                   |   |                |        |      |   |          |        |   |   |         |       

In accordance with Statement of Financial Accounting Standards (SFAS)
No. 115, Accounting for Certain Investments in Debt and Equity Securities,
the Company classified TLCs investment of approximately $2.1 million in
Book4golf.com as available-for-sale securities. SFAS No. 130, Reporting Comprehensive Incomerequires
unrealized gains or losses on the Companys available-for-sale securities to be
included in accumulated other comprehensive income, a component of
stockholders equity. In the third quarter of 2001, management determined the
decline in market value of the Companys investment in Book4Golf.com was other
than temporary. In accordance with SFAS No. 12, Accounting for Certain
Marketable Securities,the investment was written down to realizable value,
recognizing a nonoperating pretax loss of $2.1 million. The tax benefit
associated with the loss was $0.8 million.

6. SPECIAL CHARGES

In the first quarter of 2002, the Company recorded a pretax special charge
of $60.3 million, primarily related to the restructuring completed on January
18, 2002, resulting from the events of September 11, 2001. Components of the
special charge are as follows:

|                                                                    |       |   |                 |        | 
|------------------------------------------------------------------- | ----- | - | --------------- | ------ | 
|                                                                    |       |   | Special Charges
|                                                                    |       |   |                
|                                                                    |       |   | (In thousands) 
|Impairment of owned aircraft and engines (based on appraised value) |       | $ | 39,225          |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Fleet restructuring costs                                           |       |   | 9,915           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Losses on sale-leaseback transactions                               |       |   | 6,328           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Professional fees                                                   |       |   | 4,745           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Write-off of computer system and security equipment                 |       |   | 3,411           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Severance                                                           |       |   | 656             |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Revision of estimate for second quarter 2001 special charge         |       |   | (4,000          | )     
|                                                                    |       |   |                 |       
|                                                                    | Total |   | $               | 60,280 | 
|                                                                    |       |   |                 |       

Of this amount, approximately $10.0 million, principally related to losses
on sale-leaseback transactions, fleet restructuring costs, professional fees
and severance was accrued.

In April 2001, Holdings implemented a cost reduction plan to respond to a
softening economy. The plan included a slowing of the airlines growth through
the return of seven older 737-300 leased aircraft to the lessors in the second
half of 2001 and January 2002 and significant reductions in overhead due in
part to select reductions-in-force of

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 2002

management, administrative and clerical
personnel. The Company recorded a pretax charge of $35.7 million in the second
quarter of 2001 related to the earlier-than-planned aircraft returns and
reductions-in-force.

The following table presents the payments and other settlements made
during the third quarter of 2002 and the remaining special charge accruals as
of September 30, 2002.

|                                                       |  |           |       |               |  |              |        |            |  |       |      |   |  |   |     |   |  |   |        |  
|------------------------------------------------------ |  | --------- | ----- | ------------- |  | ------------ | ------ | ---------- |  | ----- | ---- | - |  | - | --- | - |  | - | ------ | -
|                                                       |  | Sale-     |       | Fleet         |  | Professional |        | Reduction- |  |       |      |  
|                                                       |  | Leaseback |       | Restructuring |  | Fees         |        | in-force   |  | Total
|                                                       |  |           |       |               |  |              |        |            |  |      
|Balance at June 30, 2002                               |  | $         | 4,009 |               |  | $            | 1,961  |            |  | $     | 500  |   |  | $ | 20  |   |  | $ | 6,490  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Payments                                               |  |           |      |               |  |              | (218   | )          |  |       | (500 | ) |  |   | (20 | ) |  |   | (738   | )
|                                                      
|                                                      
|                                                      
|                                                      
|Loss on sale-leasebacks                                |  |           | (101  | )             |  |              |       |            |  |       |     |   |  |   |    |   |  |   | (101   | )
|                                                      
|                                                      
|                                                      
|                                                      
|Reclassification
of aircraft rent due to
restructuring |  |           |      |               |  |              | 4,696  |            |  |       |     |   |  |   |    |   |  |   | 4,696  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Revision of estimate                                   |  |           |      |               |  |              | (2,000 | )          |  |       |     |   |  |   |    |   |  |   | (2,000 | )
|                                                       |  |           |       |               |  |              |        |            |  |       |      |   |  |   |     |   |  |   |        |  
|Balance at September 30, 2002                          |  | $         | 3,908 |               |  | $            | 4,439  |            |  | $     |     |   |  | $ |    |   |  | $ | 8,347  |  
|                                                       |  |           |       |               |  |              |        |            |  |       |      |   |  |   |     |   |  |   |        |  

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

7. NONOPERATING INCOME (EXPENSE)  OTHER, NET

Under the airline compensation provisions of the Air Transportation Safety
and System Stabilization Act (the Act), each air carrier is entitled to
receive the lesser of: (i) its direct and incremental losses for the period
September 11, 2001 to December 31, 2001 or (ii) its proportional available seat
mile allocation (based on available seat miles for August 2001) of the $4.5
billion compensation available under the Act. In 2001, AWA received $98.2
million under the Act from the United States Government and expected to
receive, based on its losses and its share of available seat miles, at least an
additional $10.0 million. In accordance with Emerging Issues Task Force
(EITF) Issue No. 01-10, Accounting for the Impact of the Terrorist Attacks
of September 11, 2001,AWA recognized $108.2 million of federal government
assistance in 2001, including $60.3 million recognized in the third quarter of
2001, as nonoperating income because direct and incremental losses incurred
during 2001 exceeded that amount. In July 2002, AWA received an additional
$12.3 million under the Act. Accordingly, $10.0 million was credited against
the receivable established in 2001 and $2.3 million was recognized as
nonoperating income in the second quarter of 2002. In August 2002, AWA
received an additional payment of $6.2 million under the Act, which was
recognized as nonoperating income in the accompanying condensed consolidated
statements of operations in the third quarter of 2002.

In July 2001, AWA recognized a nonoperating pretax gain of approximately
$1.1 million from the sale of warrants to purchase common stock of Expedia.com.

In September 2001, AWA completed a sale of two owned aircraft engines,
with a combined net book value of $10.9 million, for approximately $10.0
million as part of a sale leaseback transaction. The resulting $0.9 million
pretax loss on this transaction was recognized in the accompanying condensed
consolidated statements of operations, classified in Nonoperating Income
(Expense)  Other, Net.

In the third quarter of 2001, management determined the decline in market
value of the Companys investment in Book4Golf.com of approximately $2.1
million was other than temporary. In accordance with SFAS No. 12, Accounting
for Certain Marketable Securities,the investment was written down to
realizable value, recognizing a nonoperating pretax loss of $2.1 million.

8



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 2002

8. EARNINGS PER SHARE (EPS)

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

|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |            | 
|--------------------------------------------------------------- | ------------------------------------------------------ | - | ------------------ | ---------- | ----------------- | - | ------------------------------------------- | ---------- | ---- | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                                                |                                                        |   | Three Months Ended |            | Nine Months Ended
|                                                                |                                                        |   | September 30,      |            | September 30,    
|                                                                |                                                        |   | 2002               |            | 2001              |   | 2002                                        |            | 2001
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |     
|                                                                |                                                        |   |                    |            |                   |   | (In thousands of dollars except share data)
|BASIC LOSS PER SHARE                                            |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (30,990            | )          |                   | $ | (31,679                                     | )          |      | $ | (125,465   | )          |  | $ | (86,999    | )         
|                                                               
|                                                               
|                                                               
|                                                               
|Cumulative effect of change in accounting principle             |                                                        |   |                   |            |                   |   |                                            |            |      |   | (272,284   | )          |  |   |           |           
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Net loss                                                        |                                                        | $ | (30,990            | )          |                   | $ | (31,679                                     | )          |      | $ | (397,749   | )          |  | $ | (86,999    | )         
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Weighted average common shares outstanding                      |                                                        |   | 33,723,382         |            |                   |   | 33,691,379                                  |            |      |   | 33,725,904 |            |  |   | 33,652,938 |           
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Basic loss per share:                                           |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|                                                               
|                                                               
|                                                               
|                                                               
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (0.92              | )          |                   | $ | (0.94                                       | )          |      | $ | (3.72      | )          |  | $ | (2.59      | )         
|                                                               
|                                                               
|                                                               
|                                                               
|Cumulative effect of change in accounting principle             |                                                        |   |                   |            |                   |   |                                            |            |      |   | (8.07      | )          |  |   |           |           
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Net loss                                                        |                                                        | $ | (0.92              | )          |                   | $ | (0.94                                       | )          |      | $ | (11.79     | )          |  | $ | (2.59      | )         
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|DILUTED LOSS PER SHARE                                          |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (30,990            | )          |                   | $ | (31,679                                     | )          |      | $ | (125,465   | )          |  | $ | (86,999    | )         
|                                                               
|                                                               
|                                                               
|                                                               
|Cumulative effect of change in accounting principle             |                                                        |   |                   |            |                   |   |                                            |            |      |   | (272,284   | )          |  |   |           |           
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Net loss                                                        |                                                        | $ | (30,990            | )          |                   | $ | (31,679                                     | )          |      | $ | (397,749   | )          |  | $ | (86,999    | )         
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|                                                               
|                                                               
|                                                               
|                                                               
|Share computation:                                              |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Weighted average common shares outstanding             |   |                    | 33,723,382 |                   |   |                                             | 33,691,379 |      |   |            | 33,725,904 |  |   |            | 33,652,938 | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Assumed exercise of stock options and warrants         |   |                    |           |                   |   |                                             |           |      |   |            |           |  |   |            |           | 
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|                                                                | Weighted average common shares outstanding as adjusted |   |                    | 33,723,382 |                   |   |                                             | 33,691,379 |      |   |            | 33,725,904 |  |   |            | 33,652,938 | 
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Diluted loss per share:                                         |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|                                                               
|                                                               
|                                                               
|                                                               
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (0.92              | )          |                   | $ | (0.94                                       | )          |      | $ | (3.72      | )          |  | $ | (2.59      | )         
|                                                               
|                                                               
|                                                               
|                                                               
|Cumulative effect of change in accounting principle             |                                                        |   |                   |            |                   |   |                                            |            |      |   | (8.07      | )          |  |   |           |           
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           
|Net loss                                                        |                                                        | $ | (0.92              | )          |                   | $ | (0.94                                       | )          |      | $ | (11.79     | )          |  | $ | (2.59      | )         
|                                                                |                                                        |   |                    |            |                   |   |                                             |            |      |   |            |            |  |   |            |           

For the three months ended September 30, 2002, 8,033,918 stock options are
not included in the computation of diluted EPS because the option exercise
prices were greater than the average market price of common stock for the
period.

For the three months ended September 30, 2001, 1,065 incremental shares
from assumed exercise of stock options are not included in the computation of
diluted EPS because of the antidilutive effect on EPS. In addition, 5,582,262
stock options are not included in the computation of diluted EPS because the
option exercise prices were greater than the average market price of common
stock for the period.

For the nine months ended September 30, 2002, 29,432 incremental shares
from assumed exercise of stock options and 3,725,865 incremental shares from
assumed exercise of warrants issued in conjunction with the government
guaranteed loan are not included in the computation of diluted EPS because of
the antidilutive effect on

9



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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 2002

EPS. In addition, 7,075,527 stock options are not
included in the computation of diluted EPS because the option exercise prices
were greater than the average market price of common stock for the period.

For the nine months ended September 30, 2001, 91,569 incremental shares
from assumed exercise of stock options are not included in the computation of
diluted EPS because of the antidilutive effect on EPS. In addition, 4,975,565
stock options are not included in the computation of diluted EPS because
the option exercise prices were greater than the average market price of common
stock for the period.

9. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 142, Goodwill and Other Intangible Assets.SFAS No. 142 primarily
addresses the accounting for goodwill and intangible assets subsequent to their
acquisition. SFAS No. 142 does not permit the amortization of goodwill as
required by Accounting Principles Board (APB) Opinion No. 17, Intangible
Assets.Rather, goodwill will be subject to a periodic impairment test, using
a two-step process. The first step is to identify a potential impairment. The
second step of the goodwill impairment test measures the amount of the
impairment loss, using a fair value-based approach. Under SFAS No. 142,
reorganization value in excess of amounts allocable to identifiable assets
(ERV) shall be reported as goodwill and accounted for in the same manner as
goodwill. SFAS No. 142 is effective for fiscal years beginning after December
15, 2001. Upon adoption of this statement on January 1, 2002, the Company
recorded an impairment loss of $272.3 million, which was determined by an
independent valuation of the Company. The impairment loss was recorded as the
cumulative effect of a change in accounting principle.

The following table presents reported net loss and loss per share
exclusive of ERV amortization expense for the three and nine months ended
September 30, 2002 and 2001.

|                                 |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|-------------------------------- |  | ------------------ | ------- | ----------------- |  | --------------------------------------- | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                 |  | Three Months Ended |         | Nine Months Ended
|                                 |  | September 30,      |         | September 30,    
|                                 |  | 2002               |         | 2001              |  | 2002                                    |         | 2001
|                                 |  |                    |         |                   |  |                                         |         |     
|                                 |  |                    |         |                   |  | (In thousands except per share amounts)
|Reported net loss                |  | $                  | (30,990 | )                 |  | $                                       | (31,679 | )    |  | $ | (397,749 | ) |  | $ | (86,999 | )
|                                
|                                
|                                
|                                
|ERV amortization, net of tax (1) |  |                    |        |                   |  |                                         | 5,373   |      |  |   |         |   |  |   | 16,119  |  
|                                 |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|Adjusted net loss                |  | $                  | (30,990 | )                 |  | $                                       | (26,306 | )    |  | $ | (397,749 | ) |  | $ | (70,880 | )
|                                 |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|Basic loss per share:            |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|                                
|                                
|                                
|                                
|Reported net loss                |  | $                  | (0.92   | )                 |  | $                                       | (0.94   | )    |  | $ | (11.79   | ) |  | $ | (2.59   | )
|                                
|                                
|                                
|                                
|ERV amortization, net of tax (1) |  |                    |        |                   |  |                                         | 0.16    |      |  |   |         |   |  |   | 0.48    |  
|                                 |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|Adjusted net loss                |  | $                  | (0.92   | )                 |  | $                                       | (0.78   | )    |  | $ | (11.79   | ) |  | $ | (2.11   | )
|                                 |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|Diluted loss per share:          |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|                                
|                                
|                                
|                                
|Reported net loss                |  | $                  | (0.92   | )                 |  | $                                       | (0.94   | )    |  | $ | (11.79   | ) |  | $ | (2.59   | )
|                                
|                                
|                                
|                                
|ERV amortization, net of tax (1) |  |                    |        |                   |  |                                         | 0.16    |      |  |   |         |   |  |   | 0.48    |  
|                                 |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  
|Adjusted net loss                |  | $                  | (0.92   | )                 |  | $                                       | (0.78   | )    |  | $ | (11.79   | ) |  | $ | (2.11   | )
|                                 |  |                    |         |                   |  |                                         |         |      |  |   |          |   |  |   |         |  

(1)  Amortization of ERV is not a tax-deductible expense.

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 2002

10. CODE SHARE AGREEMENT

In August 2002, AWA and Hawaiian Airlines announced a new code share and
marketing partnership. The new agreement provides for reciprocal participation
in each carriers frequent flyer programs as well as AWAs code sharing on
Hawaiian Airlines flights that link AWAs Phoenix hub with the Hawaiian islands
of Hawaii, Oahu, Maui, Kaui, Lanai and Molokai. The code share and frequent
flyer program agreements became effective on October 11, 2002.

11. SEGMENT DISCLOSURES

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

12. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections as of April 2002. This standard rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishment of Debt, and an
amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements and excludes extraordinary item
treatment for gains and losses associated with the extinguishment of
debt that do not meet the APB Opinion No. 30, Reporting the Results of
Operations    Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions (APB 30) criteria. Any gain or loss on extinguishment of debt
that was classified as an extraordinary item in prior periods presented that
does not meet the criteria in APB 30 for classification as an extraordinary
item shall be reclassified. SFAS No. 145 also amends SFAS No. 13,
Accounting for Leases, as well as other existing authoritative
pronouncements to make various technical corrections, clarify meanings,
or describe their applicability under changed conditions. The Company is
required to adopt SFAS No. 145 effective January 1, 2003 and does not expect
that it will have a material impact on its financial condition or results of
operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This standard addresses
financial accounting and reporting for costs associated with exit or disposal
activities and replaces Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to
Exit an Activity (including Certain Costs Incurred in a Restructuring)
(EITF 94-3). SFAS No. 146 requires that a liability for costs associated
with an exit or disposal activity be recognized when the liability is
incurred. Under EITF 94-3, a liability for exit costs, as defined in EITF
94-3, was recognized at the date of an entitys commitment to an exit plan.
The provisions of SFAS No. 146 are effective for exit or disposal activities
that are initiated by the Company after December 31, 2002.

11



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

The unaudited condensed balance sheets of AWA, a wholly-owned subsidiary
of Holdings, as of September 30, 2002 and December 31, 2001, the condensed
statements of operations for the three and nine months ended September 30, 2002
and 2001 and the condensed statements of cash flows for the nine months ended
September 30, 2002 and 2001, together with the related notes, are set forth on
the following pages.

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

|                        |                                                                                 |                            |           |               |         |              |           |           |         | 
|----------------------- | ------------------------------------------------------------------------------- | -------------------------- | --------- | ------------- | ------- | ------------ | --------- | --------- | ------- | 
|                        |                                                                                 |                            |           | September 30, |         | December 31,
|                        |                                                                                 |                            |           | 2002          |         | 2001        
|                        |                                                                                 |                            |           |               |         |             
|Assets                  |                                                                                 | (Unaudited)                |           |               |         |             
|Current assets:         |                                                                                 |                            |           |               |         |              |           |          
|                       
|                       
|                       
|                       
|                        | Cash and cash equivalents                                                       |                            | $         | 373,947       |         |              | $         | 148,520   |        
|                       
|                       
|                       
|                       
|                        | Short-term investments                                                          |                            |           | 40,023        |         |              |           |          |        
|                       
|                       
|                       
|                       
|                        | Accounts receivable, net                                                        |                            |           | 94,432        |         |              |           | 103,431   |        
|                       
|                       
|                       
|                       
|                        | Advances to parent and affiliate, net                                           |                            |           |              |         |              |           | 265,361   |        
|                       
|                       
|                       
|                       
|                        | Expendable spare parts and supplies, net                                        |                            |           | 56,139        |         |              |           | 51,833    |        
|                       
|                       
|                       
|                       
|                        | Prepaid expenses                                                                |                            |           | 89,705        |         |              |           | 40,589    |        
|                        |                                                                                 |                            |           |               |         |              |           |          
|                        |                                                                                 | Total current assets       |           |               | 654,246 |              |           |           | 609,734 | 
|                        |                                                                                 |                            |           |               |         |              |           |          
|Property and equipment: |                                                                                 |                            |           |               |         |              |           |          
|                       
|                       
|                       
|                       
|                        | Flight equipment                                                                |                            |           | 988,863       |         |              |           | 1,082,649 |        
|                       
|                       
|                       
|                       
|                        | Other property and equipment                                                    |                            |           | 260,965       |         |              |           | 249,739   |        
|                       
|                       
|                       
|                       
|                        | Equipment purchase deposits                                                     |                            |           | 49,650        |         |              |           | 49,650    |        
|                        |                                                                                 |                            |           |               |         |              |           |          
|                        |                                                                                 |                            | 1,299,478 |               |         |              | 1,382,038 |          
|                       
|                       
|                       
|                       
|                        | Less accumulated depreciation and amortization                                  |                            |           | 637,236       |         |              |           | 559,175   |        
|                        |                                                                                 |                            |           |               |         |              |           |          
|                        |                                                                                 | Net property and equipment |           |               | 662,242 |              |           |           | 822,863 | 
|                        |                                                                                 |                            |           |               |         |              |           |          
|Other assets:           |                                                                                 |                            |           |               |         |              |           |          
|                       
|                       
|                       
|                       
|                        | Restricted cash                                                                 |                            |           | 53,199        |         |              |           | 50,859    |        
|                       
|                       
|                       
|                       
|                        | Advances to parent company, net                                                 |                            |           | 257,771       |         |              |           |          |        
|                       
|                       
|                       
|                       
|                        | Reorganization value in excess of amounts allocable to
identifiable assets, net |                            |           |              |         |              |           | 252,010   |        
|                       
|                       
|                       
|                       
|                        | Deferred income tax                                                             |                            |           | 37,596        |         |              |           |          |        
|                       
|                       
|                       
|                       
|                        | Other assets, net                                                               |                            |           | 154,919       |         |              |           | 61,768    |        
|                        |                                                                                 |                            |           |               |         |              |           |          
|                        |                                                                                 | Total other assets         |           |               | 503,485 |              |           |           | 364,637 | 
|                        |                                                                                 |                            |           |               |         |              |           |          
|                        |                                                                                 | $                          | 1,819,973 |               |         | $            | 1,797,234 |          
|                        |                                                                                 |                            |           |               |         |              |           |           |        

See accompanying notes to condensed financial statements.

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

|                                        |                                                                               |                            |           |               |         |              |           |         |         | 
|--------------------------------------- | ----------------------------------------------------------------------------- | -------------------------- | --------- | ------------- | ------- | ------------ | --------- | ------- | ------- | 
|                                        |                                                                               |                            |           | September 30, |         | December 31,
|                                        |                                                                               |                            |           | 2002          |         | 2001        
|                                        |                                                                               |                            |           |               |         |             
|Liabilities and Stockholder's Equity    |                                                                               | (Unaudited)                |           |               |         |             
|Current liabilities:                    |                                                                               |                            |           |               |         |              |           |        
|                                       
|                                       
|                                       
|                                       
|                                        | Current maturities of long-term debt                                          |                            | $         | 23,456        |         |              | $         | 119,141 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                              |                            |           | 178,353       |         |              |           | 243,996 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Payable to affiliate, net                                                     |                            |           | 12,762        |         |              |           |        |        
|                                       
|                                       
|                                       
|                                       
|                                        | Air traffic liability                                                         |                            |           | 206,461       |         |              |           | 176,985 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued compensation and vacation benefits                                    |                            |           | 43,321        |         |              |           | 40,912  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued taxes                                                                 |                            |           | 72,606        |         |              |           | 88,382  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other accrued liabilities                                                     |                            |           | 37,272        |         |              |           | 29,397  |        
|                                        |                                                                               |                            |           |               |         |              |           |        
|                                        |                                                                               | Total current liabilities  |           |               | 574,231 |              |           |         | 698,813 | 
|                                        |                                                                               |                            |           |               |         |              |           |        
|Long-term debt, less current maturities |                                                                               |                            | 708,739   |               |         |              | 222,955   |        
|                                       
|                                       
|                                       
|                                       
|Deferred credits and other liabilities  |                                                                               |                            | 144,335   |               |         |              | 131,965   |        
|                                       
|                                       
|                                       
|                                       
|Deferred tax liability, net             |                                                                               |                            |          |               |         |              | 8,569     |        
|                                       
|                                       
|                                       
|                                       
|Commitments and contingencies           |                                                                               |                            |           |               |         |              |           |        
|                                       
|                                       
|                                       
|                                       
|Stockholders equity:                   |                                                                               |                            |           |               |         |              |           |        
|                                       
|                                       
|                                       
|                                       
|                                        | Common Stock $.01 par value. Authorized, issued and
outstanding; 1,000 shares |                            |           |              |         |              |           |        |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                    |                            |           | 555,132       |         |              |           | 519,748 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings (deficit)                                                   |                            |           | (165,923      | )       |              |           | 213,794 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive income                                        |                            |           | 3,459         |         |              |           | 1,390   |        
|                                        |                                                                               |                            |           |               |         |              |           |        
|                                        |                                                                               | Total stockholders equity |           |               | 392,668 |              |           |         | 734,932 | 
|                                        |                                                                               |                            |           |               |         |              |           |        
|                                        |                                                                               | $                          | 1,819,973 |               |         | $            | 1,797,234 |        
|                                        |                                                                               |                            |           |               |         |              |           |         |        

See accompanying notes to condensed financial statements.

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AMERICA WEST AIRLINES, INC.
Condensed Statements of Operations
(In thousands)
(Unaudited)

|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |           | 
|-------------------------------------------------------------------------------------- | ------------------------------------------- | ----------------------------------------- | ------- | ------------------ | ------- | ----------------- | -------- | ------- | ------- | ---- | -------- | --------- | --------- | - | -------- | --------- | --------- | 
|                                                                                       |                                             |                                           |         | Three Months Ended |         | Nine Months Ended
|                                                                                       |                                             |                                           |         | September 30,      |         | September 30,    
|                                                                                       |                                             |                                           |         | 2002               |         | 2001              |          | 2002    |         | 2001
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |     
|Operating revenues:                                                                    |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Passenger                                   |                                           | $       | 489,327            |         |                   | $        | 463,345 |         |      | $        | 1,433,611 |           |   | $        | 1,563,539 |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Cargo                                       |                                           |         | 6,045              |         |                   |          | 7,839   |         |      |          | 20,620    |           |   |          | 27,599    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other                                       |                                           |         | 14,678             |         |                   |          | 7,545   |         |      |          | 42,562    |           |   |          | 38,507    |          
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|                                                                                       |                                             | Total operating revenues                  |         |                    | 510,050 |                   |          |         | 478,729 |      |          |           | 1,496,793 |   |          |           | 1,629,645 | 
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Operating expenses:                                                                    |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Salaries and related costs                  |                                           |         | 154,636            |         |                   |          | 155,934 |         |      |          | 442,319   |           |   |          | 451,246   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Aircraft rents                              |                                           |         | 76,548             |         |                   |          | 88,529  |         |      |          | 220,057   |           |   |          | 265,409   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other rents and landing fees                |                                           |         | 39,904             |         |                   |          | 34,596  |         |      |          | 119,716   |           |   |          | 104,785   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Aircraft fuel                               |                                           |         | 81,673             |         |                   |          | 85,778  |         |      |          | 213,209   |           |   |          | 278,677   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Agency commissions                          |                                           |         | 8,357              |         |                   |          | 16,461  |         |      |          | 33,114    |           |   |          | 62,017    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Aircraft maintenance materials and repairs  |                                           |         | 57,726             |         |                   |          | 67,399  |         |      |          | 186,521   |           |   |          | 197,867   |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Depreciation and amortization               |                                           |         | 18,946             |         |                   |          | 16,591  |         |      |          | 53,331    |           |   |          | 46,662    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Amortization of excess reorganization value |                                           |         |                   |         |                   |          | 4,974   |         |      |          |          |           |   |          | 14,922    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Special charges                             |                                           |         | (2,000             | )       |                   |          |        |         |      |          | 58,255    |           |   |          | 35,695    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other                                       |                                           |         | 116,492            |         |                   |          | 109,393 |         |      |          | 335,111   |           |   |          | 354,390   |          
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|                                                                                       |                                             | Total operating expenses                  |         |                    | 552,282 |                   |          |         | 579,655 |      |          |           | 1,661,633 |   |          |           | 1,811,670 | 
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Operating loss                                                                         |                                             |                                           | (42,232 | )                  |         |                   | (100,926 | )       |         |      | (164,840 | )         |           |   | (182,025 | )        
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Nonoperating income (expenses):                                                        |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Interest income                             |                                           |         | 4,080              |         |                   |          | 6,238   |         |      |          | 13,469    |           |   |          | 17,779    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Interest expense, net                       |                                           |         | (19,664            | )       |                   |          | (11,916 | )       |      |          | (60,289   | )         |   |          | (26,073   | )        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Federal government assistance               |                                           |         | 6,202              |         |                   |          | 60,282  |         |      |          | 8,466     |           |   |          | 60,282    |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Other, net                                  |                                           |         | (157               | )       |                   |          | 4       |         |      |          | (2,449    | )         |   |          | 767       |          
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|                                                                                       |                                             | Total nonoperating income (expenses), net |         |                    | (9,539  | )                 |          |         | 54,608  |      |          |           | (40,803   | ) |          |           | 52,755    | 
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Loss before income tax benefit and cumulative
effect
of change in accounting principle |                                             |                                           | (51,771 | )                  |         |                   | (46,318  | )       |         |      | (205,643 | )         |           |   | (129,270 | )        
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Income tax benefit                                                                     |                                             |                                           | (19,444 | )                  |         |                   | (15,258  | )       |         |      | (77,936  | )         |           |   | (41,858  | )        
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Loss before cumulative effect of change in
accounting principle                        |                                             |                                           | (32,327 | )                  |         |                   | (31,060  | )       |         |      | (127,707 | )         |           |   | (87,412  | )        
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Cumulative effect of change in accounting principle                                    |                                             |                                           |        |                    |         |                   |         |         |         |      | (252,010 | )         |           |   |         |          
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          
|Net loss                                                                               |                                             | $                                         | (32,327 | )                  |         | $                 | (31,060  | )       |         | $    | (379,717 | )         |           | $ | (87,412  | )        
|                                                                                       |                                             |                                           |         |                    |         |                   |          |         |         |      |          |           |           |   |          |           |          

See accompanying notes to condensed financial statements.

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##### Table of Contents



AMERICA WEST AIRLINES, INC.
Condensed Statements of Cash Flows
(In thousands)
(Unaudited)

|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |          |         |          |  
|------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------- | --------------------------------------------------- | -------- | ----------------- | ------ | ------- | -------- | ------- | -------- | -
|                                                                    |                                                              |                                           |                                                     |          | Nine Months Ended
|                                                                    |                                                              |                                           |                                                     |          | September 30,    
|                                                                    |                                                              |                                           |                                                     |          |                  
|                                                                    |                                                              |                                           |                                                     |          | 2002              |        | 2001   
|                                                                    |                                                              |                                           |                                                     |          |                   |        |        
|Net cash provided by operating activities                           |                                                              | $                                         | 700                                                 |          |                   | $      | 116,532 |         
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Cash flows from investing activities:                               |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Purchases of property and equipment                          |                                           |                                                     | (117,514 | )                 |        |         | (449,812 | )      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Sales (purchases) of short-term investments                  |                                           |                                                     | (40,023  | )                 |        |         | 39,566   |        
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Proceeds from sale and leaseback of aircraft and engines     |                                           |                                                     | 175,478  |                   |        |         | 74,000   |        
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Equipment purchase deposits and other                        |                                           |                                                     | 89       |                   |        |         | 15,023   |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    |                                                              |                                           | Net cash provided by (used in) investing activities |          |                   | 18,030 |         |          |         | (321,223 | )
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Cash flows from financing activities:                               |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Repayment of debt                                            |                                           |                                                     | (191,702 | )                 |        |         | (125,190 | )      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Proceeds from issuance of debt                               |                                           |                                                     | 435,386  |                   |        |         | 326,422  |        
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Payment of debt issue costs                                  |                                           |                                                     | (36,987  | )                 |        |         |         |        
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Other                                                        |                                           |                                                     |         |                   |        |         | (8,305   | )      
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    |                                                              | Net cash provided by financing activities |                                                     |          | 206,697           |        |         |          | 192,927 |         
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Net increase (decrease) in cash and cash equivalents                |                                                              |                                           | 225,427                                             |          |                   |        | (11,764 | )       
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Cash and cash equivalents at beginning of period                    |                                                              |                                           | 148,520                                             |          |                   |        | 139,150 |         
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Cash and cash equivalents at end of period                          |                                                              | $                                         | 373,947                                             |          |                   | $      | 127,386 |         
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Cash, cash equivalents, and short-term investments at end of period |                                                              | $                                         | 413,970                                             |          |                   | $      | 138,506 |         
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Cash paid (refunded) for:                                           |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Interest, net of amounts capitalized                         |                                           | $                                                   | 20,005   |                   |        | $       | 12,365   |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Income taxes paid (refunded)                                 |                                           | $                                                   | (63,391  | )                 |        | $       | 25       |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|Non-cash investing and financing activities:                        |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Reclassification of advances to parent company, net          |                                           | $                                                   | 257,771  |                   |        | $       |         |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Issuance of convertible notes, net of cancellations          |                                           | $                                                   | 60,186   |                   |        | $       |         |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Issuance of warrants                                         |                                           | $                                                   | 35,383   |                   |        | $       |         |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Equipment acquired through capital lease                     |                                           | $                                                   | 16,878   |                   |        | $       |         |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Equipment acquired with issuance of notes payable            |                                           | $                                                   | 64,163   |                   |        | $       |         |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Notes payable canceled under the aircraft purchase agreement |                                           | $                                                   | (10,500  | )                 |        | $       | (29,750  | )      
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Notes payable issued for equipment purchase deposits         |                                           | $                                                   | 10,500   |                   |        | $       | 10,500   |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         
|                                                                    | Payment in kind notes issued, net of returns                 |                                           | $                                                   | 3,810    |                   |        | $       |         |        
|                                                                    |                                                              |                                           |                                                     |          |                   |        |         |         

See accompanying notes to condensed financial statements.

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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
September 30, 2002

1. BASIS OF PRESENTATION

The unaudited condensed financial statements included herein have been
prepared by AWA, a wholly owned subsidiary of Holdings, pursuant to the rules
and regulations of the Securities and Exchange Commission and, in accordance
with those rules and regulations, certain information and footnotes required by
generally accepted accounting principles have been omitted. In the opinion of
management, the condensed financial statements reflect all adjustments, which
are of a normal recurring nature, necessary for a fair presentation. Certain
prior year amounts have been reclassified to conform with current year
presentation. The accompanying condensed financial statements should be read
in conjunction with the financial statements and related notes thereto included
in the Companys Annual Report on Form 10-K for the year ended December 31,
2001.

2. LETTER OF CREDIT FACILITY

In July 2002, AWA received approximately $17.6 million that had been held
as cash collateral to secure a $20 million letter of credit facility. The
letter of credit facility was terminated after having been replaced with new
letters of credit prior to June 30, 2002. The $17.6 million reduced the
balance of restricted cash with a corresponding increase in unrestricted cash
and cash equivalents in the third quarter of 2002. During the third quarter of
2002, AWA also issued new letters of credit resulting in a net decrease in
restricted cash of approximately $11.2 million during the quarter.

3. FLIGHT EQUIPMENT

In September 2002, two aircraft lessors exercised their put rights under
their aircraft lease agreements to extend the leases for two Airbus A320
aircraft for an additional 12 months each.

4. ADVANCES TO PARENT COMPANY AND AFFILIATE

As of September 30, 2002, AWA had net advances to Holdings of $257.8
million, which were classified in Other Assetson AWAs condensed balance
sheet due to certain restrictions related to the timing of repayment under the
$429 million government guaranteed loan and the $73.2 million term loan. In
addition, AWA had a net payable of $12.8 million due principally to TLC, a
wholly owned subsidiary of Holdings. This payable, which is primarily related
to credit card receipts collected by AWA for vacation packages sold by TLC, was
classified in AWAs condensed balance sheet as a current liability.

5. TERM LOAN PAYMENT

In July 2002, AWA made a mandatory repayment of approximately $16.7
million on its $89.9 million term loan. The payment was made as a result of a
decrease in the fair market value of the assets securing the loan following the
terrorist attacks of September 11, 2001. Collateral for the loan consists of
aircraft, spare engines, rotable aircraft parts inventory and a maintenance
facility. AWA and the lenders also amended certain provisions in the loan
agreement related to the collateral appraisal procedures.

6. COMPREHENSIVE LOSS

Comprehensive loss includes changes in the fair value of derivative
financial instruments that qualify for hedge accounting. For the three months
ended September 30, 2002 and 2001, AWA recorded a total comprehensive loss of
$28.4 million and $31.2 million, respectively. For the nine months ended
September 30, 2002 and 2001, AWA recorded a total comprehensive loss of $377.6
million and $87.2 million, respectively. The difference between net loss and
comprehensive loss for the three and nine months ended September 30, 2002 and
2001 is detailed in the following table:

16



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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
September 30, 2002

|                   |                                                                                                                                  |   |                    |       |                   |   |         |        |      |   |          |        |   |   |         |        |  
|------------------ | -------------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | ----- | ----------------- | - | ------- | ------ | ---- | - | -------- | ------ | - | - | ------- | ------ | -
|                   |                                                                                                                                  |   | Three Months Ended |       | Nine Months Ended
|                   |                                                                                                                                  |   | September 30,      |       | September 30,    
|                   |                                                                                                                                  |   |                    |       |                  
|                   |                                                                                                                                  |   | 2002               |       | 2001              |   | 2002    |        | 2001
|                   |                                                                                                                                  |   |                    |       |                   |   |         |        |     
|                   |                                                                                                                                  |   |                    |       | (In thousands)   
|Net loss           |                                                                                                                                  | $ | (32,327            | )     |                   | $ | (31,060 | )      |      | $ | (379,717 | )      |   | $ | (87,412 | )     
|                  
|                  
|                  
|                  
|                   | Unrealized gains (losses) on derivative
instruments, net of deferred taxes                                                       |   |                    | 3,940 |                   |   |         | (3,683 | )    |   |          | 3,459  |   |   |         | (1,727 | )
|                  
|                  
|                  
|                  
|                   | Reclassification adjustment to net loss of
previously reported unrealized gains (losses)
on derivative instruments, net of taxes |   |                    |      |                   |   |         | 3,592  |      |   |          | (1,390 | ) |   |         | 1,970  |  
|                   |                                                                                                                                  |   |                    |       |                   |   |         |        |      |   |          |        |   |   |         |       
|                   | Total other comprehensive income (loss)                                                                                          |   |                    | 3,940 |                   |   |         | (91    | )    |   |          | 2,069  |   |   |         | 243    |  
|                   |                                                                                                                                  |   |                    |       |                   |   |         |        |      |   |          |        |   |   |         |       
|Comprehensive loss |                                                                                                                                  | $ | (28,387            | )     |                   | $ | (31,151 | )      |      | $ | (377,648 | )      |   | $ | (87,169 | )     
|                   |                                                                                                                                  |   |                    |       |                   |   |         |        |      |   |          |        |   |   |         |       

7. SPECIAL CHARGES

In the first quarter of 2002, AWA recorded a pretax special charge of
$60.3 million, primarily related to the restructuring completed on January 18,
2002, resulting from the events of September 11, 2001. Components of the
special charge are as follows:

|                                                                    |       |   |                 |        | 
|------------------------------------------------------------------- | ----- | - | --------------- | ------ | 
|                                                                    |       |   | Special Charges
|                                                                    |       |   |                
|                                                                    |       |   | (In thousands) 
|Impairment of owned aircraft and engines (based on appraised value) |       | $ | 39,225          |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Fleet restructuring costs                                           |       |   | 9,915           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Losses on sale-leaseback transactions                               |       |   | 6,328           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Professional fees                                                   |       |   | 4,745           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Write-off of computer system and security equipment                 |       |   | 3,411           |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Severance                                                           |       |   | 631             |       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Revision of estimate for second quarter 2001 special charge         |       |   | (4,000          | )     
|                                                                    |       |   |                 |       
|                                                                    | Total |   | $               | 60,255 | 
|                                                                    |       |   |                 |       

Of this amount, approximately $10.0 million, principally related to losses
on sale-leaseback transactions, fleet restructuring costs, professional fees
and severance was accrued.

In April 2001, Holdings implemented a cost reduction plan to respond to a
softening economy. The plan included a slowing of the airlines growth through
the return of seven older 737-300 leased aircraft to the lessors in the second
half of 2001 and January 2002 and significant reductions in overhead due in
part to select reductions-in-force of management, administrative and clerical
personnel. The Company recorded a pretax charge of $35.7 million in the second
quarter of 2001 related to the earlier-than-planned aircraft returns and
reductions-in-force.

The following table presents the payments and other settlements made
during the third quarter of 2002 and the remaining special charge accruals as
of September 30, 2002.

|                                                       |  |           |       |               |  |              |        |            |  |       |      |   |  |   |     |   |  |   |        |  
|------------------------------------------------------ |  | --------- | ----- | ------------- |  | ------------ | ------ | ---------- |  | ----- | ---- | - |  | - | --- | - |  | - | ------ | -
|                                                       |  | Sale-     |       | Fleet         |  | Professional |        | Reduction- |  |       |      |  
|                                                       |  | Leaseback |       | Restructuring |  | Fees         |        | in-force   |  | Total
|                                                       |  |           |       |               |  |              |        |            |  |      
|Balance at June 30, 2002                               |  | $         | 4,009 |               |  | $            | 1,961  |            |  | $     | 500  |   |  | $ | 20  |   |  | $ | 6,490  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Payments                                               |  |           |      |               |  |              | (218   | )          |  |       | (500 | ) |  |   | (20 | ) |  |   | (738   | )
|                                                      
|                                                      
|                                                      
|                                                      
|Loss on sale-leasebacks                                |  |           | (101  | )             |  |              |       |            |  |       |     |   |  |   |    |   |  |   | (101   | )
|                                                      
|                                                      
|                                                      
|                                                      
|Reclassification
of aircraft rent due to
restructuring |  |           |      |               |  |              | 4,696  |            |  |       |     |   |  |   |    |   |  |   | 4,696  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Revision of estimate                                   |  |           |      |               |  |              | (2,000 | )          |  |       |     |   |  |   |    |   |  |   | (2,000 | )
|                                                       |  |           |       |               |  |              |        |            |  |       |      |   |  |   |     |   |  |   |        |  
|Balance at September 30, 2002                          |  | $         | 3,908 |               |  | $            | 4,439  |            |  | $     |     |   |  | $ |    |   |  | $ | 8,347  |  
|                                                       |  |           |       |               |  |              |        |            |  |       |      |   |  |   |     |   |  |   |        |  

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

17



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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
September 30, 2002

8. NONOPERATING INCOME (EXPENSE)  OTHER, NET

Under the airline compensation provisions of the Air Transportation Safety
and System Stabilization Act (the Act), each air carrier is entitled to
receive the lesser of: (i) its direct and incremental losses for the period
September 11, 2001 to December 31, 2001 or (ii) its proportional available seat mile
allocation (based on available seat miles for August 2001) of the $4.5 billion
compensation available under the Act. In 2001, AWA received $98.2 million
under the Act from the United States Government and expected to receive, based
on its losses and its share of available seat miles, at least an additional
$10.0 million. In accordance with Emerging Issues Task Force (EITF) Issue
No. 01-10, Accounting for the Impact of the Terrorist Attacks of September 11,
2001,AWA recognized $108.2 million of federal government assistance in 2001,
including $60.3 million recognized in the third quarter of 2001, as
nonoperating income because direct and incremental losses incurred during 2001
exceeded that amount. In July 2002, AWA received an additional $12.3 million
under the Act. Accordingly, $10.0 million was credited against the receivable
established in 2001 and $2.3 million was recognized as nonoperating income in
the second quarter of 2002. In August 2002, AWA received an additional payment
of $6.2 million under the Act, which was recognized as nonoperating income in
the accompanying condensed statements of operations in the third quarter of
2002.

In July 2001, AWA recognized a nonoperating pretax gain of approximately
$1.1 million from the sale of warrants to purchase common stock of Expedia.com.

In September 2001, AWA completed a sale of two owned aircraft engines,
with a combined net book value of $10.9 million, for approximately $10.0
million as part of a sale leaseback transaction. The resulting $0.9 million
pretax loss on this transaction was recognized in the accompanying condensed
statements of operations, classified in Nonoperating Income (Expense)  Other,
Net.

9. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets.SFAS No. 142 primarily addresses the accounting for goodwill and
intangible assets subsequent to their acquisition. SFAS No. 142 does not
permit the amortization of goodwill as required by APB Opinion No. 17,
Intangible Assets.Rather, goodwill will be subject to a periodic impairment
test, using a two-step process. The first step is to identify a potential
impairment. The second step of the goodwill impairment test measures the
amount of the impairment loss, using a fair value-based approach. Under SFAS
No. 142, ERV shall be reported as goodwill and accounted for in the same manner
as goodwill. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001. Upon adoption of this statement on January 1, 2002, AWA
recorded an impairment loss of $252.0 million, which was determined by an
independent valuation of the Company. The impairment loss was recorded as the
cumulative effect of a change in accounting principle.

The following table presents reported net loss exclusive of ERV
amortization expense for the three and nine months ended September 30, 2002 and
2001.

|                                 |  |                    |         |                   |  |                |         |      |  |   |          |   |  |   |         |  
|-------------------------------- |  | ------------------ | ------- | ----------------- |  | -------------- | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                 |  | Three Months Ended |         | Nine Months Ended
|                                 |  | September 30,      |         | September 30,    
|                                 |  |                    |         |                  
|                                 |  | 2002               |         | 2001              |  | 2002           |         | 2001
|                                 |  |                    |         |                   |  |                |         |     
|                                 |  |                    |         |                   |  | (In thousands) |         |      |  |  
|Reported net loss                |  | $                  | (32,327 | )                 |  | $              | (31,060 | )    |  | $ | (379,717 | ) |  | $ | (87,412 | )
|                                
|                                
|                                
|                                
|ERV amortization, net of tax (1) |  |                    |        |                   |  |                | 4,974   |      |  |   |         |   |  |   | 14,922  |  
|                                 |  |                    |         |                   |  |                |         |      |  |   |          |   |  |   |         |  
|Adjusted net loss                |  | $                  | (32,327 | )                 |  | $              | (26,086 | )    |  | $ | (379,717 | ) |  | $ | (72,490 | )
|                                 |  |                    |         |                   |  |                |         |      |  |   |          |   |  |   |         |  

(1)  Amortization of ERV is not a tax-deductible expense.

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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
September 30, 2002

10. CODE SHARE AGREEMENT

In August 2002, AWA and Hawaiian Airlines announced a new code share and
marketing partnership. The new agreement provides for reciprocal participation
in each carriers frequent flyer programs as well as AWAs code sharing on
Hawaiian Airlines flights that link AWAs Phoenix hub with the Hawaiian islands
of Hawaii, Oahu, Maui, Kaui, Lanai and Molokai. The code share and frequent
flyer program agreements became effective on October 11, 2002.

11. SEGMENT DISCLOSURES

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

12. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections as of April 2002. This standard rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishment of Debt, and an
amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements and excludes extraordinary item
treatment for gains and losses associated with the extinguishment of
debt that do not meet the APB Opinion No. 30, Reporting the Results of
Operations    Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions (APB 30) criteria. Any gain or loss on extinguishment of debt
that was classified as an extraordinary item in prior periods presented that
does not meet the criteria in APB 30 for classification as an extraordinary
item shall be reclassified. SFAS No. 145 also amends SFAS No. 13,
Accounting for Leases, as well as other existing authoritative
pronouncements to make various technical corrections, clarify meanings,
or describe their applicability under changed conditions. The Company is
required to adopt SFAS No. 145 effective January 1, 2003 and does not expect
that it will have a material impact on its financial condition or results of
operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This standard addresses
financial accounting and reporting for costs associated with exit or disposal
activities and replaces Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to
Exit an Activity (including Certain Costs Incurred in a Restructuring)
(EITF 94-3). SFAS No. 146 requires that a liability for costs associated
with an exit or disposal activity be recognized when the liability is
incurred. Under EITF 94-3, a liability for exit costs, as defined in EITF
94-3, was recognized at the date of an entitys commitment to an exit plan.
The provisions of SFAS No. 146 are effective for exit or disposal activities
that are initiated by the Company after December 31, 2002.

19



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##### Table of Contents



AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
September 30, 2002




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

Holdings is the parent company of AWA and TLC. AWA is the eighth largest
commercial airline carrier in the United States operating through its principal
hubs located in Phoenix, Arizona and Las Vegas, Nevada, and a mini-hub located
in Columbus, Ohio. As of September 30, 2002, AWA served 58 destinations in
North America, including seven destinations in Mexico and two in Canada. TLC
arranges and sells vacation packages primarily to Las Vegas that may include
airfare, hotel accommodations and ground transportation. Holdings primary
business activity is ownership of all the capital stock of AWA and TLC.

Overview

During the third quarter of 2002, the airline industry and AWA continued
to feel the negative effects of the September 11, 2001 terrorist attacks and
the soft economic conditions. Passenger revenues have been adversely affected
by a decline in high-yield business traffic and a general decline in the demand
for air travel after the terrorist attacks. The airline industry also
incurred, and continues to face, an increase in costs resulting from enhanced
security measures and aviation-related insurance.

During the first quarter of 2002, we improved our liquidity as a result of
the closing of a $429 million loan supported by a $380 million government
guarantee in January 2002. In addition, we eliminated base commissions for
travel agency tickets issued in the United States effective March 21, 2002 and
we introduced a new pricing structure offering lower and more flexible fares on
March 24, 2002. The new pricing structure has succeeded in increasing America
Wests share in key business markets. Immediately following the introduction
of the new fare structure, higher-cost competitors placed extremely low prices
in non-stop America West markets and Continental Airlines cancelled its long
standing code share and frequent flyer agreements with America West. Despite
these actions, America Wests year-over-year domestic unit revenue performance
has been better than that for the industry each month since the new pricing
structure was introduced.

We believe near-term revenues will continue to be negatively impacted by
the soft economic conditions and decline in business traffic. In addition, we
expect AWAs revenues and costs to be negatively impacted by the threat of
future terrorist attacks and government responses in the near and long-term, as
well as the real and perceived hassle factor associated with increased
security at airports.

Airline Operations Update

In the third quarter of 2002, AWA continued to make improvements in a
number of key service areas based on the most recent statistics published by
the Department of Transportation, or DOT:



| |  |  | On-time performance improved to 78.7% in July 2002 from 74.3% in July
2001 and to 82.7% in August 2002 from 70.6% in August 2001. Through the
first eight months of 2002, AWA ranked second in the industry in on-time
performance.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The percentage of flights cancelled dropped to 1.6% in July 2002 from
1.9% in July 2001 and to 1.6% in August 2002 from 2.1% in August 2001.                                                                                       
|
| |  |  | AWA posted year-over-year improvements in mishandled baggage of 3% in
July 2002 and 10% in August 2002.                                                                                                                            
|
| |  |  | Customer complaints to the DOT declined by 57% in July 2002 and 66%
in August 2002 compared to the comparable periods in 2001.                                                                                                     

20



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

Summary of Holdings Financial Results

Holdings recorded a consolidated net loss of $31.0 million in the third
quarter of 2002, a diluted loss per share of $0.92. This compares to a
consolidated net loss of $31.7 million, or $0.94 per diluted share, in the
third quarter of 2001. The 2002 results include a nonoperating pretax gain of
$6.2 million ($3.9 million after tax) related to the federal government
assistance received under the Air Transportation Safety and System
Stabilization Act (see Note 7, Nonoperating Income (Expense)  Other, Netin
Notes to Condensed Consolidated Financial Statements) and a $2.0 million pretax
reduction in special charges ($1.2 million after tax) due to a revision of the
estimated costs related to the early termination of certain aircraft leases.
See Note 6, Special Chargesin Notes to Condensed Consolidated Financial
Statements. The 2001 results included a nonoperating pretax gain of $60.3
million ($37.5 million after tax) related to the federal government assistance
and a $2.1 million nonoperating pretax loss ($1.3 million after tax) related to
the write down to realizable value of the Companys investment in
Book4Golf.com. The Company recorded a consolidated income tax benefit for
financial reporting purposes of $18.6 million for the 2002 third quarter on a
loss before income tax benefit of $49.6 million. This compares to an income
tax benefit of $15.1 million in the third quarter of 2001 on a pretax loss of
$46.8 million.

Holdings recorded a consolidated loss before the cumulative effect of a
change in accounting principle of $125.5 million for the nine months ended
September 30, 2002, a diluted loss per share of $3.72. This compares to a
consolidated net loss of $87.0 million, or $2.59 per diluted share, for the
nine month period in 2001. Including the cumulative effect of a change in
accounting principle related to the Companys adoption of SFAS No. 142,
Goodwill and Other Intangible Assetson January 1, 2002, Holdings net loss
for the nine months ended September 30, 2002 was $397.7 million, or $11.79 per
diluted share. See Note 9, Cumulative Effect of a Change in Accounting
Principlein Notes to Condensed Consolidated Financial Statements. The
decline in earnings during the period was due primarily to depressed passenger
traffic and revenues following the terrorist attacks on September 11, 2001 and
a reduction in business travel driven by the continuing soft economic
conditions. The 2002 results include pretax special charges of $58.3 million
($36.3 million after tax) primarily related to the restructuring completed on
January 18, 2002, including the reduction in value of owned aircraft, losses on
sales of assets, fleet restructuring costs and professional fees. See Note 6,
Special Chargesin Notes to Condensed Consolidated Financial Statements. The
Company also recognized a nonoperating pretax charge of $2.8 million ($1.7
million after tax) related to the write-off of the Companys investment in an
e-commerce entity and a nonoperating pretax gain of $8.5 million ($5.3 million
after tax) related to the federal government assistance. The 2001 results
included the $60.3 million pretax gain ($37.5 million after tax) related to the
federal government assistance discussed above and pretax special charges of
$35.7 million ($22.2 million after tax) resulting from the Companys cost
reduction initiatives. The 2001 results also included an $11.0 million pretax
gain ($6.8 million after tax) resulting from the settlement in March 2001 of a
lawsuit related to an air-to-ground telecommunication system that was
previously written off and the $2.1 million pretax loss ($1.3 million after
tax) related to the write down of the Companys investment in Book4Golf.com
discussed above. The Company recorded a consolidated income tax benefit for
financial reporting purposes of $76.5 million for the first nine months of 2002
on a loss before income tax benefit and cumulative effect of a change in
accounting principle of $202.0 million. This compares to an income tax benefit
of $40.6 million in the comparable 2001 period on a pretax loss of $127.6
million.

21



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

RESULTS OF OPERATIONS

The following discussion provides an analysis of AWAs results of
operations for the three and nine months ended September 30, 2002 and material
changes compared to the three and nine months ended September 30, 2001.

The table below sets forth selected operating data for AWA.

|                                                 |                   |  |                    |      |         |  |                   |      |         |  |      |      |           |  |         |      |  |  |         |      |  |  |       |      |  
|------------------------------------------------ | ----------------- |  | ------------------ | ---- | ------- |  | ----------------- | ---- | ------- |  | ---- | ---- | --------- |  | ------- | ---- |  |  | ------- | ---- |  |  | ----- | ---- | -
|                                                 |                   |  | Three Months Ended |      | Percent |  | Nine Months Ended |      | Percent
|                                                 |                   |  | September 30,      |      | Change  |  | September 30,     |      | Change 
|                                                 |                   |  | 2002               |      | 2001    |  | 2002-2001         |      | 2002    |  | 2001 |      | 2002-2001
|                                                 |                   |  |                    |      |         |  |                   |      |         |  |      |      |          
|Aircraft (end of period)                         |                   |  | 144                |      |         |  | 149               |      |         |  | (3.4 | )    |           |  | 144     |      |  |  | 149     |      |  |  | (3.4  | )   
|                                                
|                                                
|                                                
|                                                
|Average daily aircraft utilization (hours)       |                   |  | 10.0               |      |         |  | 9.5               |      |         |  | 5.3  |      |           |  | 9.5     |      |  |  | 10.1    |      |  |  | (5.9  | )   
|                                                
|                                                
|                                                
|                                                
|Available seat miles (in millions)               |                   |  | 7,149              |      |         |  | 6,695             |      |         |  | 6.8  |      |           |  | 20,076  |      |  |  | 20,647  |      |  |  | (2.8  | )   
|                                                
|                                                
|                                                
|                                                
|Block hours                                      |                   |  | 132,789            |      |         |  | 128,066           |      |         |  | 3.7  |      |           |  | 374,366 |      |  |  | 397,322 |      |  |  | (5.8  | )   
|                                                
|                                                
|                                                
|                                                
|Average stage length (miles)                     |                   |  | 958                |      |         |  | 895               |      |         |  | 7.0  |      |           |  | 943     |      |  |  | 891     |      |  |  | 5.8   |     
|                                                
|                                                
|                                                
|                                                
|Average passenger journey (miles)                |                   |  | 1,482              |      |         |  | 1,369             |      |         |  | 8.3  |      |           |  | 1,432   |      |  |  | 1,309   |      |  |  | 9.4   |     
|                                                
|                                                
|                                                
|                                                
|Revenue passenger miles (in millions)            |                   |  | 5,356              |      |         |  | 4,953             |      |         |  | 8.1  |      |           |  | 14,807  |      |  |  | 15,039  |      |  |  | (1.5  | )   
|                                                
|                                                
|                                                
|                                                
|Load factor (percent)                            |                   |  | 74.9               |      |         |  | 74.0              |      |         |  | 0.9  | pts  |           |  | 73.8    |      |  |  | 72.8    |      |  |  | 1.0   | pts 
|                                                
|                                                
|                                                
|                                                
|Passenger enplanements (in thousands)            |                   |  | 5,165              |      |         |  | 5,034             |      |         |  | 2.6  |      |           |  | 14,547  |      |  |  | 15,432  |      |  |  | (5.7  | )   
|                                                
|                                                
|                                                
|                                                
|Yield per revenue passenger mile (cents)         |                   |  | 9.14               |      |         |  | 9.36              |      |         |  | (2.4 | )    |           |  | 9.68    |      |  |  | 10.40   |      |  |  | (6.9  | )   
|                                                
|                                                
|                                                
|                                                
|Revenue per available seat mile:                 |                   |  |                    |      |         |  |                   |      |         |  |      |      |           |  |         |      |  |  |         |      |  |  |       |     
|                                                
|                                                
|                                                
|                                                
|                                                 | Passenger (cents) |  |                    | 6.84 |         |  |                   | 6.92 |         |  |      | (1.2 | )         |  |         | 7.14 |  |  |         | 7.57 |  |  |       | (5.7 | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Total (cents)     |  |                    | 7.13 |         |  |                   | 7.15 |         |  |      | (0.3 | )         |  |         | 7.46 |  |  |         | 7.89 |  |  |       | (5.4 | )
|                                                
|                                                
|                                                
|                                                
|Fuel consumption (gallons in millions)           |                   |  | 109.2              |      |         |  | 105.6             |      |         |  | 3.5  |      |           |  | 305.3   |      |  |  | 323.6   |      |  |  | (5.7  | )   
|                                                
|                                                
|                                                
|                                                
|Average fuel price (cents per gallon)            |                   |  | 74.8               |      |         |  | 81.3              |      |         |  | (8.0 | )    |           |  | 69.8    |      |  |  | 86.1    |      |  |  | (18.9 | )   
|                                                
|                                                
|                                                
|                                                
|Average number of full-time equivalent
employees |                   |  | 12,320             |      |         |  | 12,667            |      |         |  | (2.7 | )    |           |  | 11,957  |      |  |  | 12,854  |      |  |  | (7.0  | )   

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

|                                            |  |                    |       |         |  |                   |      |         |  |      |        |           |  |  |      |  |  |  |      |  |  |  |        |  
|------------------------------------------- |  | ------------------ | ----- | ------- |  | ----------------- | ---- | ------- |  | ---- | ------ | --------- |  |  | ---- |  |  |  | ---- |  |  |  | ------ | -
|                                            |  | Three Months Ended |       | Percent |  | Nine Months Ended |      | Percent
|                                            |  | September 30,      |       | Change  |  | September 30,     |      | Change 
|                                            |  | 2002               |       | 2001    |  | 2002-2001         |      | 2002    |  | 2001 |        | 2002-2001
|                                            |  |                    |       |         |  |                   |      |         |  |      |        |          
|(in cents)                                  |  |                    |       |         |  |                   |      |         |  |      |        |           |  |  |      |  |  |  |      |  |  |  |        |  
|                                           
|                                           
|                                           
|                                           
|Salaries and related costs                  |  |                    | 2.16  |         |  |                   | 2.33 |         |  |      | (7.1   | )         |  |  | 2.20 |  |  |  | 2.18 |  |  |  | 0.8    |  
|                                           
|                                           
|                                           
|                                           
|Aircraft rents                              |  |                    | 1.07  |         |  |                   | 1.32 |         |  |      | (19.0  | )         |  |  | 1.10 |  |  |  | 1.28 |  |  |  | (14.7  | )
|                                           
|                                           
|                                           
|                                           
|Other rents and landing fees                |  |                    | 0.56  |         |  |                   | .52  |         |  |      | 8.0    |           |  |  | 0.60 |  |  |  | .51  |  |  |  | 17.5   |  
|                                           
|                                           
|                                           
|                                           
|Aircraft fuel                               |  |                    | 1.14  |         |  |                   | 1.28 |         |  |      | (10.8  | )         |  |  | 1.06 |  |  |  | 1.35 |  |  |  | (21.3  | )
|                                           
|                                           
|                                           
|                                           
|Agency commissions                          |  |                    | 0.12  |         |  |                   | .25  |         |  |      | (52.5  | )         |  |  | 0.16 |  |  |  | .30  |  |  |  | (45.1  | )
|                                           
|                                           
|                                           
|                                           
|Aircraft maintenance materials and
repairs  |  |                    | 0.81  |         |  |                   | 1.01 |         |  |      | (19.8  | )         |  |  | 0.93 |  |  |  | .96  |  |  |  | (3.1   | )
|                                           
|                                           
|                                           
|                                           
|Depreciation and amortization               |  |                    | 0.27  |         |  |                   | .25  |         |  |      | 6.9    |           |  |  | 0.27 |  |  |  | .23  |  |  |  | 17.5   |  
|                                           
|                                           
|                                           
|                                           
|Amortization of excess reorganization
value |  |                    |      |         |  |                   | .07  |         |  |      | (100.0 | )         |  |  |     |  |  |  | .07  |  |  |  | (100.0 | )
|                                           
|                                           
|                                           
|                                           
|Special charges                             |  |                    | (0.03 | )       |  |                   |     |         |  |      |       |           |  |  | 0.29 |  |  |  | .17  |  |  |  | 67.8   |  
|                                           
|                                           
|                                           
|                                           
|Other                                       |  |                    | 1.63  |         |  |                   | 1.63 |         |  |      | 0.3    |           |  |  | 1.67 |  |  |  | 1.72 |  |  |  | (2.8   | )
|                                            |  |                    |       |         |  |                   |      |         |  |      |        |           |  |  |      |  |  |  |      |  |  |  |        |  
|                                            |  |                    | 7.73  |         |  |                   | 8.66 |         |  |      | (10.8  | )         |  |  | 8.28 |  |  |  | 8.77 |  |  |  | (5.7   | )
|                                            |  |                    |       |         |  |                   |      |         |  |      |        |           |  |  |      |  |  |  |      |  |  |  |        |  

22



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

Three Months Ended September 30, 2002 and 2001

For the three months ended September 30, 2002, AWA realized an operating
loss of $42.2 million compared to an operating loss of $100.9 million in last
years third quarter. Loss before income tax benefit for the three month
period in 2002 was $51.8 million compared to $46.3 million in 2001.

Total operating revenues for the third quarter of 2002 were $510.1
million. Passenger revenues were $489.3 million for the three months ended
September 30, 2002, an increase of $26.0 million or 5.6% from the 2001 quarter.
The increase in passenger revenues and traffic statistics for the third
quarter of 2002 as compared to the third quarter of 2001 is directly related to
the terrorist attacks of September 11, 2001 and the ensuing decline in demand
for air travel in the third quarter of 2001. An 8.1% increase in revenue
passenger miles (RPM) exceeded a 6.8% increase in capacity as measured by
available seat miles (ASM), resulting in a 0.9 point increase in load factor
(the percentage of available seats that are filled with revenue passengers).
The increase in load factor was offset in part by a 2.4% decrease in revenue
per passenger mile (yield) driven by a significant decline in business travel
and the introduction of security fees paid by passengers. As a result,
passenger revenue per available seat mile (RASM) decreased 1.2% to 6.84 cents
in 2002 from 6.92 cents in 2001. Cargo revenues decreased 22.9% to $6.0
million due to lower freight and mail volumes following the terrorist attacks.
Other revenues increased 94.5% to $14.7 million for the third quarter of 2002
due primarily to increased net revenues from AWAs code sharing agreement with
Mesa Airlines and higher ticket refund and reissue penalty fees for ticketing
changes.

Operating expenses in the third quarter of 2002 decreased $27.4 million or
4.7% as compared to the 2001 third quarter, while ASMs increased 6.8%. As a
result, CASM decreased 10.8% to 7.73 cents in the third quarter of 2002 from
8.66 cents for the comparable 2001 period. Significant changes in the
components of CASM are explained as follows:



| |  |  | Salaries and related costs per ASM decreased 7.1% primarily due to
the 6.8% increase in ASMs and a reduction in headcount after September
11, 2001. A 2.7% decrease in the average number of full-time
equivalent employees (FTE) was offset in part by a 1.9% increase in average salaries and related costs per FTE as a result of
higher disability and workers compensation insurance costs ($2.2
million).                                                                                                                                                    
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Aircraft rent expense per ASM decreased 19.0% primarily due to the
reduction of rental rates negotiated with AWAs aircraft lessors as part
of the government guaranteed loan transaction.                                                                                                                                                                                                                                                                                                                                                                            
|
| |  |  | Other rents and landing fees expense per ASM increased 8.0% in the
third quarter of 2002 primarily due to higher airport rents ($2.9
million) and landing fees ($2.3 million) as airports are forced to
spread their costs over fewer airline operations. A $1.0 million
increase in flight simulator rents, primarily as a result of the sale
and leaseback of three previously owned flight simulators in the third
quarter of 2001, also contributed to the increase. These increases were
offset in part by a $0.5 million decrease in the cost of borrowed parts.
|
| |  |  | Aircraft fuel expense per ASM decreased 10.8% primarily due to an
8.0% decrease in the average price per gallon of fuel to 74.8 cents in
the 2002 quarter from 81.3 cents in 2001 and the 6.8% increase in ASMs.
These decreases were offset in part by a 3.5% increase in fuel
consumption due to higher block hours in the 2002 quarter.                                                                                                                                                                                                                            
|
| |  |  | Agency commissions expense per ASM decreased 52.5% primarily due to
the elimination of base commission for travel agency tickets issued in
the United States, effective March 21, 2002.                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Aircraft maintenance materials and repairs expense per ASM decreased
19.8% primarily due to lower aircraft C-Check ($7.4 million), engine
overhaul ($2.3 million), airframe maintenance ($1.5 million) and
capitalized maintenance amortization ($1.0 million) expenses and the
6.8% increase in ASMs. These decreases were offset in part by a $2.3
million increase in the accrual for the estimated costs of maintenance
required to be performed upon the return of leased aircraft.                                                                              

23



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002



| |  |  | Depreciation and amortization expense per ASM increased 6.9% due
primarily to higher amortization expense related to computer hardware
and software ($2.9 million) and aircraft leasehold improvements ($0.6
million). These increases were offset in part by lower airframe
depreciation expense ($1.6 million) and the 6.8% increase in ASMs.                                             
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Upon adoption of SFAS
No. 142, Goodwill and Other Intangible Assets,
the Company wrote off its ERV balance effective January 1, 2002, resulting in a $5.0 million decrease in amortization
expense in the third quarter of 2002 when compared to the third quarter
of 2001. See Note 9, Cumulative Effect of a Change in Accounting
Principlein Notes to Condensed Financial Statements.

Excluding the federal government assistance of $6.2 million and $60.3
million recognized in 2002 and 2001, respectively, net nonoperating expenses
increased $10.0 million to $15.7 million in the third quarter of 2002 from $5.7
million in the third quarter of 2001. Net interest expense increased $7.7
million in the third quarter of 2002 due to higher average outstanding debt
while interest income decreased $2.2 million. Higher average cash balances
were offset by lower escrow balances from the 2001-1 Pass Through Trust
Certificates and lower interest rates in the third quarter of 2002 compared to
the third quarter of 2001. See Liquidity and Capital Resources  Pass Through
Trustsbelow.

Nine Months Ended September 30, 2002 and 2001

For the nine months ended September 30, 2002, AWA realized an operating
loss of $164.8 million. Excluding special charges recognized in 2002 and 2001,
AWAs operating loss was $106.6 million in 2002 compared to an operating loss
of $146.3 million in the first nine months of 2001. Loss before income tax
benefit and the cumulative effect of a change in accounting principle for the
nine-month period in 2002 was $205.6 million compared to $129.3 million in
2001.

Total operating revenues for the nine months ended September 30, 2002 were
$1.5 billion. Passenger revenues were $1.4 billion, a decrease of $129.9
million or 8.3% from the 2001 nine-month period. A 1.5% decrease in RPMs was
exceeded by a 2.8% decrease in ASMs, resulting in a 1.0 point increase in load
factor. The decline in passenger revenues and traffic statistics for the nine
months ended September 30, 2002 as compared to the nine-month period in 2001 is
a result of the soft economic conditions and the decline in demand for air
travel following the terrorist attacks of September 11, 2001. The increase in
load factor was more than offset by a 6.9% decrease in yield resulting in a
5.7% decrease in RASM to 7.14 cents in 2002 from 7.57 cents in 2001. The
decrease in yield was driven by a significant decline in business travel and
the introduction of security fees paid by passengers. Cargo revenues decreased
25.3% to $20.6 million due to lower freight and mail volumes following the
terrorist attacks. Other revenues increased 10.5% to $42.6 million for the
nine months ended September 30, 2002 due primarily to higher ticket refund and
reissue penalty fees for ticketing changes.

Excluding special charges, operating expenses in the first nine months of
2002 decreased $172.6 million or 9.7% as compared to the 2001 nine-month
period, while ASMs decreased 2.8%. As a result, CASM excluding special charges
decreased 7.1% to 7.99 cents in 2002 from 8.60 cents for the nine-month period
in 2001. Significant changes in the components of CASM are explained as
follows:



| |  |  | Aircraft rent expense per ASM decreased 14.7% primarily due to the
reduction of rental rates negotiated with AWAs aircraft lessors as part
of the government guaranteed loan transaction.                                                                                                                                                                                                                                                                                                                                            
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Other rents and landing fees expense per ASM increased 17.5% in the
first nine months of 2002 primarily due to higher airport rents ($6.2
million), costs for borrowed parts ($3.3 million) and landing fees ($3.1
million). A $3.0 million increase in flight simulator rents, primarily
as a result of the sale and leaseback of three previously owned flight
simulators in the third quarter of 2001, also contributed to the
increase. These increases were offset in part by a decrease in aircraft
engine rents ($1.3 million).

24



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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002



| |  |  | Aircraft fuel expense per ASM decreased 21.3% primarily due to an
18.9% decrease in the average price per gallon of fuel to 69.8 cents in
the first nine months of 2002 from 86.1 cents in 2001 and a 5.7%
decrease in fuel consumption due to lower block hours in the 2002
nine-month period. These decreases were offset in part by the 2.8%
decrease in ASMs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Agency commissions expense per ASM decreased 45.1% primarily due to
the elimination of base commission for travel agency tickets issued in
the United States, effective March 21, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | Aircraft maintenance materials and repairs expense per ASM decreased
3.1% primarily due to lower aircraft C-Check ($12.9 million), airframe
maintenance ($3.8 million), engine overhaul ($3.2 million), engineering
order ($2.0 million) and capitalized maintenance amortization ($1.5
million) expenses. These decreases were offset in part by a $12.7
million increase in the accrual for the estimated costs of maintenance
required to be performed upon the return of leased aircraft.                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Depreciation and amortization expense per ASM increased 17.5% due
primarily to higher amortization expense related to computer hardware,
software and facility improvements ($4.6 million) and aircraft leasehold
improvements ($2.2 million). An increase in depreciation expense
related to rotable aircraft parts ($1.5 million) also contributed to the
increase. These increases were offset in part by a decrease in airframe
depreciation expense ($1.6 million).                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | Upon adoption of SFAS
No. 142, Goodwill and Other Intangible Assets,
the Company wrote off its ERV balance effective January 1, 2002, resulting in a $14.9 million decrease in amortization
expense in the first nine months of 2002 when compared to the first nine
months of 2001. See Note 9, Cumulative Effect of a Change in
Accounting Principlein Notes to Condensed Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | Other operating expenses per ASM decreased 2.8% due primarily to
decreases in passenger traffic related expenses including catering costs
($16.5 million), computer reservation systems booking fees ($5.8
million), advertising expenses ($5.5 million), refueling and service
checks ($3.9 million) and furnished accommodations ($3.1 million), as
well as lower professional, technical and legal fees ($6.0 million) and
interrupted trip and baggage claim expenses ($12.4 million) due to
improved airline operating performance. These decreases were offset in
part by increases in traffic liability and other insurance ($28.0
million) and security costs ($6.0 million). In addition, the 2001 period
included an $11.0 million recovery from the settlement of a lawsuit
related to an air to ground telecommunication system that was previously
written off.

Excluding the federal government assistance of $8.5 million and $60.3
million recognized in 2002 and 2001, respectively, net nonoperating expenses
increased $41.7 million to $49.3 million in the first nine months of 2002 from
$7.5 million in the first nine months of 2001. Net interest expense increased
$34.2 million due to higher average outstanding debt while interest income
decreased $4.3 million. Higher average cash balances were offset by lower
escrow balances from the 2001-1 Pass Through Trust Certificates and lower
interest rates in the first nine months of 2002 compared to the first nine
months of 2001. See Liquidity and Capital Resources  Pass Through Trusts
below.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

In January 2002, AWA closed a $429 million loan supported by a $380
million government loan guarantee. Completion of the government loan and
related restructuring increased the Companys liquidity by approximately $390
million ($429 million loan, less 550 basis point first year guarantee fee to
the U.S. Treasury Department and other loan participants, and less other
transaction fees.)

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

At September 30, 2002, Holdings and AWAs unrestricted cash and cash
equivalents and short-term investments were $422.0 million and $414.0 million,
respectively. Net cash provided by operating activities for Holdings and AWA
was $0.8 million and $0.7 million, respectively, in the first nine months of
2002. The year-over-year decrease in net cash provided by operating
activities of $117.0 million and $115.8 million for
Holdings and AWA, respectively, was due primarily to a higher loss in the 2002
period and payment in the 2002 period of amounts due vendors and aircraft
lessors that had been subject to the Companys cash conservation program prior
to the closing of the government loan in January 2002. During the first nine
months of 2002, the Company paid $58.1 million of transportation taxes to the
IRS that had been deferred from 2001, as allowed under the Air Transportation
Safety and System Stabilization Act. The Company also benefited from a $60.3 million federal income tax refund in 2002.

In the first nine months of 2002, net cash provided by investing
activities by Holdings and AWA was $17.7 million and $18.0 million,
respectively. Principal investing activities during the first nine months of
2002 included the purchase of two new A320 aircraft, which were subsequently
refinanced as part of a sale-leaseback transaction. The Company also received
$175.5 million of proceeds from the sale and leaseback of one new A319 aircraft
and four new A320 aircraft and purchased short-term investments totaling $40.0
million. The 2001 period included the purchase of ten new A319 aircraft, two
of which were subsequently refinanced in the second quarter of 2001 and eight
that were refinanced in the fourth quarter of 2001 as the result of
sale-leaseback transactions. The 2001 period also included $74.0 million of
proceeds from the sale and leaseback of the two new A319 aircraft and two owned
aircraft engines and sales of short-term investments totaling $39.6 million.

In the first nine months of 2002, net cash provided by financing
activities by Holdings and AWA was $206.5 million and $206.7 million,
respectively, primarily due to the government guaranteed loan. The Company
also repaid $161.2 million of debt as a result of the sale and leaseback of the
five aircraft discussed above and paid $37.0 million in loan-related fees
during the period. The first nine months of 2001 included $281.4 million of
borrowing to fund the acquisition of ten new A319 aircraft and the repayment of
$49.4 million of debt as a result of the sale and leaseback of two A319
aircraft. The 2001 period also included the repayment of $66.5 million in the
first quarter of 2001 and borrowing of $45.0 million in June 2001 under the
Companys revolving credit facility.

Capital expenditures for the nine months ended September 30, 2002 were
approximately $117.8 million for Holdings and $117.5 million for AWA. Included
in these amounts are capital expenditures for capitalized maintenance of
approximately $85.5 million.

In July 2002, AWA made a mandatory repayment of approximately $16.7
million on its $89.9 million term loan. The payment was made as a result of a
decrease in the fair market value of the assets securing the loan following the
terrorist attacks of September 11, 2001. Collateral for the loan consists of
aircraft, spare engines, rotable aircraft parts inventory and a maintenance
facility. AWA and the lenders also amended certain provisions in the loan
agreement related to the collateral appraisal procedures. See Note 4, Term
Loan Paymentin Notes to Condensed Consolidated Financial Statements.

In July 2002, AWA received approximately $17.6 million that had been held
as cash collateral to secure a $20 million letter of credit facility. The
letter of credit facility was terminated after having been replaced with new
letters of credit prior to June 30, 2002. The $17.6 million reduced the
balance of restricted cash with a corresponding increase in unrestricted cash
and cash equivalents in the third quarter of 2002. During the third quarter of
2002, AWA also issued new letters of credit resulting in a net decrease in
restricted cash of approximately $11.2 million during the quarter. See Note 2,
Letter of Credit Facilityin Notes to Condensed Consolidated Financial
Statements.

Pass Through Trusts

Since AWAs restructuring in 1994, AWA has set up 13 pass through trusts,
which have issued over $1.4 billion of pass through trust certificates (also
known as Enhanced Equipment Trust Certificatesor EETC). With respect to
each of these trusts, proceeds from the certificates are deposited in an escrow
account pending their application to purchase equipment notes. The equipment
notes are secured by a security interest in the aircraft and are issued, at

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

AWAs election, either by AWA in connection with a mortgage financing of the
relevant aircraft or by a separate owner trust in connection with a leveraged
lease financing of the relevant aircraft. The pass through trust certificates
are not direct obligations of, nor guaranteed by, Holdings or AWA. However,
AWA has certain indemnity obligations in respect of the trusts and obligations
to cover certain interest shortfalls on the escrowed proceeds pending their
application to finance aircraft. All aircraft financed by these trusts are
currently structured as leverage lease financings, which are not reflected as
debt on the balance sheets of either AWA or Holdings.

AWAs 2001-1 Pass Through Trusts provided for the financing of nine Airbus
A319 aircraft and five Airbus A320 aircraft. Of the 14 aircraft, 11 were
delivered in 2001, including three in the fourth quarter of 2001. One aircraft
was delivered in the first quarter of 2002 and two were delivered in the second
quarter of 2002. Except for the aircraft delivered in the first quarter of
2002, which was already financed as a leverage lease upon delivery, the
acquisition of each aircraft was initially structured as a mortgage financing and
subsequently converted into a leverage lease financing in sale-leaseback
transactions. In connection with the purchase of the two aircraft delivered in
the second quarter of 2002, AWA issued $64.2 million of equipment notes. In
June 2002, AWA converted the mortgage financing of the three aircraft delivered
in the fourth quarter of 2001 and the two aircraft delivered in the second
quarter of 2002 into a leverage lease financing by entering into sale-leaseback
transactions. As a result, approximately $161.2 million of the equipment notes
were assumed, on a non-recourse basis, by the owner trustees that purchased the
aircraft from AWA.

Commitments

As of September 30, 2002, we had $732.2 million of long-term debt
(including current maturities). This amount consisted primarily of the $429
million government guaranteed loan, a $73.2 million secured term loan with a
group of financial institutions, $92.5 million face value of convertible senior
notes and notes payable secured by certain of AWAs aircraft.

The following table sets forth our cash obligations as of September 30,
2002.

|                                                               |                                            |   |                |       |      |   |         |       |      |   |         |        |      |   |         |        |  |   |         |        |  |   |           |         |  |   |           |         | 
|-------------------------------------------------------------- | ------------------------------------------ | - | -------------- | ----- | ---- | - | ------- | ----- | ---- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | - | --------- | ------- |  | - | --------- | ------- | 
|                                                               |                                            |   |                |       |      |   |         |       |      |   |         |        |      |   |         |        |  |   |         |        |  |   | Beyond    |         |  |   |          
|                                                               |                                            |   | 2002           |       | 2003 |   | 2004    |       | 2005 |   | 2006    |        | 2006 |   | Total  
|                                                               |                                            |   |                |       |      |   |         |       |      |   |         |        |      |   |        
|                                                               |                                            |   | (In thousands)
|Long-term debt:                                                |                                            |   |                |       |      |   |         |       |      |   |         |        |      |   |         |        |  |   |         |        |  |   |           |         |  |   |           |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Equipment notes  Non EETC (1)             |   | $              | 533   |      |   | $       | 9,674 |      |   | $       | 8,989  |      |   | $       | 8,305  |  |   | $       | 8,305  |  |   | $         | 22,854  |  |   | $         | 58,660  | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Promissory Note (2)                        |   |                | 1,221 |      |   |         | 2,443 |      |   |         |       |      |   |         |       |  |   |         |       |  |   |           |        |  |   |           | 3,664   | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Term loan (3)                              |   |                |      |      |   |         |      |      |   |         | 1,207  |      |   |         | 30,000 |  |   |         | 30,000 |  |   |           | 13,169  |  |   |           | 74,376  | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | 7.5% Convertible Senior Notes due
2009 (4) |   |                |      |      |   |         |      |      |   |         |       |      |   |         |       |  |   |         |       |  |   |           | 95,087  |  |   |           | 95,087  | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Government guaranteed loan (5)             |   |                |      |      |   |         |      |      |   |         | 85,800 |      |   |         | 85,800 |  |   |         | 85,800 |  |   |           | 171,600 |  |   |           | 429,000 | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | State loan (6)                             |   |                |      |      |   |         |      |      |   |         | 750    |      |   |         | 250    |  |   |         | 250    |  |   |           | 250     |  |   |           | 1,500   | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | 10 3/4% Senior Unsecured Notes due
2005    |   |                |      |      |   |         |      |      |   |         |       |      |   |         | 49,998 |  |   |         |       |  |   |           |        |  |   |           | 49,998  | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Industrial development bonds (7)           |   |                |      |      |   |         |      |      |   |         |       |      |   |         |       |  |   |         |       |  |   |           | 29,300  |  |   |           | 29,300  | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | AVSA promissory notes (8)                  |   |                |      |      |   |         | 7,000 |      |   |         |       |      |   |         |       |  |   |         |       |  |   |           |        |  |   |           | 7,000   | 
|                                                               |                                            |   |                |       |      |   |         |       |      |   |         |        |      |   |         |        |  |   |         |        |  |   |           |         |  |   |           |        
|                                                               |                                            |   | 1,754          |       |      |   | 19,117  |       |      |   | 96,746  |        |      |   | 174,353 |        |  |   | 124,355 |        |  |   | 332,260   |         |  |   | 748,585   |        
|                                                              
|                                                              
|                                                              
|                                                              
|Cash aircraft rental payments (9)                              |                                            |   | 61,122         |       |      |   | 322,243 |       |      |   | 296,729 |        |      |   | 286,559 |        |  |   | 262,998 |        |  |   | 2,183,841 |         |  |   | 3,413,492 |        
|                                                              
|                                                              
|                                                              
|                                                              
|Lease payments on equipment and
Facility operating leases (10) |                                            |   | 4,346          |       |      |   | 17,941  |       |      |   | 16,941  |        |      |   | 16,488  |        |  |   | 14,691  |        |  |   | 82,638    |         |  |   | 153,045   |        
|                                                              
|                                                              
|                                                              
|                                                              
|Capital lease obligation                                       |                                            |   |               |       |      |   | 3,492   |       |      |   | 3,841   |        |      |   | 4,225   |        |  |   | 4,655   |        |  |   | 1,684     |         |  |   | 17,897    |        
|                                                              
|                                                              
|                                                              
|                                                              
|Special facility revenue bonds (11)                            |                                            |   | 822            |       |      |   | 1,644   |       |      |   | 1,644   |        |      |   | 1,644   |        |  |   | 1,644   |        |  |   | 20,546    |         |  |   | 27,944    |        
|                                                              
|                                                              
|                                                              
|                                                              
|Aircraft purchase commitments (12)                             |                                            |   | 35,334         |       |      |   | 168,493 |       |      |   | 83,049  |        |      |   |        |        |  |   | 225,136 |        |  |   | 266,091   |         |  |   | 778,103   |        
|                                                               |                                            |   |                |       |      |   |         |       |      |   |         |        |      |   |         |        |  |   |         |        |  |   |           |         |  |   |           |        
|Total                                                          |                                            | $ | 103,378        |       |      | $ | 532,930 |       |      | $ | 498,950 |        |      | $ | 483,269 |        |  | $ | 633,479 |        |  | $ | 2,887,060 |         |  | $ | 5,139,066 |        
|                                                               |                                            |   |                |       |      |   |         |       |      |   |         |        |      |   |         |        |  |   |         |        |  |   |           |         |  |   |           |        



|(1) |  | Includes approximately $58.7 million of equipment notes with variable
interest rates of 2.75% to 3.0%, averaging 2.94%, installments due 2002
through 2008.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002



|(2)  |  | Includes an unsecured promissory note maturing in June 2003 with a fixed
rate of 10%. In June 2002, AWA restructured the leases for six of its
Boeing 757-200 aircraft to improve lease rental rates and other terms.
Prior to the restructuring, AWA subleased the six aircraft from The Boeing
Company (Boeing), who in turn leased the aircraft from five different
head lessors. Under the restructuring, AWA terminated the subleases with
Boeing and assumed, amended and restated the existing head leases for each
aircraft. Upon closing of the transactions, AWA paid approximately $11.8
million in security deposits and advance rental payments to the head
lessors, net of a refund from Boeing for prorated prepaid rent under the
subleases, prorated accrued rent under the head leases and cash deposits
for the estimated cost of certain maintenance work required to be
performed on the aircraft prior to their return to Boeing. As a result of
these transactions, Boeing also relinquished its interest in approximately
$11.2 million face value of 7.5% convertible notes it received as
compensation for certain concessions granted under the restructuring
completed on January 18, 2002. Furthermore, AWA issued a $4.9 million
note payable to Boeing for the value of the concessions realized with
respect to these six aircraft prior to the termination of the subleases.
The restructured leases have a remaining term of approximately six years.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(3)  |  | Includes a $73.2 million secured term loan maturing at year-end 2007 with
a variable interest rate of 4.13% and $1.2 million of interest payable in
kind through September 30, 2002 at a fixed rate of 2%. Excludes $3.5
million of interest payable in kind through December 2004. See Note 4,
Term Loan Paymentin Notes to Condensed Consolidated Financial
Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|    
|    
|    
|(4)  |  | Includes $92.5 million face value of 7.5% convertible senior notes, due
2009, and $2.6 million of interest payable in kind through September 30,
2002. Excludes $19.7 million of interest payable in kind through December
2004. For financial reporting purposes, we recorded the convertible
senior notes at their fair market value on the date of issuance. As of
September 30, 2002, the balance of the convertible senior notes in the
accompanying condensed consolidated balance sheet is approximately $62.2
million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|    
|    
|    
|(5)  |  | Government guaranteed loan includes $429.0 million due September 2008
with a variable interest rate of 2.2%. Guarantee fees of 5.5% of the
outstanding guaranteed principal balance in 2002 and approximately 8.0% of
the outstanding guaranteed principal balance in 2003 through 2008 are
payable to the U.S. Treasury Department and other loan participants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|    
|    
|    
|(6)  |  | Includes Arizona State loan of $1.5 million due December 2007 with a
variable interest rate of 5.29%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|    
|    
|    
|(7)  |  | Includes $29.3 million of 6.3% industrial development bonds due April
2023.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|    
|    
|    
|(8)  |  | Includes AVSA promissory notes of $7.0 million due 2003 with a variable
interest rate of 3.06%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|    
|    
|    
|(9)  |  | Includes non-cancelable operating leases for 133 aircraft with remaining
terms ranging from six months to approximately 22 years. Management
estimates the debt equivalent value of these operating leases approximates
$2 billion using an interest rate of 10%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|    
|    
|    
|(10) |  | Includes leases for terminal space, ground facilities, the flight
training center and computer and other equipment under non-cancelable
operating leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|    
|    
|    
|(11) |  | Includes Series 1999 Terminal 4 Improvements Bonds, due 2019.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|    
|    
|    
|(12) |  | Includes commitments to purchase a total of 22 Airbus aircraft and spare
engines for delivery in 2002 through 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

We expect to fund these cash obligations from funds provided by
operations, the proceeds of the government guaranteed loan, the $200 million of
financing commitments for Airbus aircraft obtained in connection with the
government loan, and future financings, if necessary. The cash available to us
from these sources, however, may not

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

be sufficient to cover these cash
obligations because economic factors outside our control may reduce the amount
of cash generated by operations or increase our costs. For instance, a further
economic downturn or other events (including the commencement of hostilities
against Iraq) could reduce the demand for air travel, which would reduce the
amount of cash generated by operations. An increase in borrowing costs, either
due to a reduction in our credit rating or due to a general increase in
interest rates, or in the cost of fuel, maintenance, aircraft and aircraft
engines and parts, could increase our costs, which could decrease the amount of
cash available to cover the cash obligations. In addition, we may be required
to prepay portions of the government guaranteed loan if our employee
compensation costs exceed a certain threshold; we may be required to prepay
portions of the term loan to the extent the value of the collateral securing
the term loan decreases; and we may fail to meet the minimum liquidity
threshold or the financial performance goals required to obtain financing for
certain Airbus aircraft. In any of these cases, our liquidity may be adversely
affected and we may not have sufficient cash to prepay the government loan and
meet our other obligations. Moreover, certain of our long-term debt agreements
contain a $100 million minimum cash balance requirement. As a result, we
cannot use all of our available cash to fund operations, capital expenditures
and cash obligations without violating this requirement.

Financial Covenants and Credit Rating

In addition to the minimum cash balance requirements, our long-term debt
agreements contain various negative covenants that restrict our actions,
including our ability to pay dividends, together with any other restricted
payments. Moreover, under the terms of the government guaranteed loan, we are
prohibited from paying cash dividends prior to repayment of the loan in full.
Finally, our long-term debt agreements contain cross-default provisions, which
may be triggered by defaults by us under other agreements relating to
indebtedness. As of December 31, 2001, we had suspended payment under certain
aircraft leases and, as a result, had received notices of default from certain
aircraft lessors. In January 2002, we paid in full approximately $81 million in
deferred aircraft lease payments simultaneously with the funding of the $429
million government guaranteed loan, thereby curing the defaults. See Risk
Factors Relating to America West and Industry Related Risks  Our high level of
debt and fixed costs limits our ability to fund general corporate requirements,
limits our flexibility in responding to competitive developments and increases
our vulnerability to adverse economic and industry conditions.As of
September 30, 2002, Holdings and AWA were in compliance with the covenants in
their long-term debt agreements.

In June 2002, Standard & Poors raised its credit ratings on Holdings to
B- from CCC- and AWA for its senior unsecured debt to CCC from C and removed
them from Credit Watch, where they were placed on September 13, 2001. Ratings
on the various pass-through certificates were also raised. However, the
outlook continues to be negative. Moodys currently rates AWAs senior
unsecured debt at Ca. Our relatively low credit ratings may impair our ability
to incur additional indebtedness. The rating agencies base their ratings on
our financial performance and operations, our cash flow and liquidity, the
level of our debt and industry conditions in general. If our financial
performance or industry conditions do not improve, we may face future
downgrades, which could further negatively impact our borrowing costs and the
prices of our equity or debt securities. See Risk Factors Relating to America
West and Industry Related Risks  Because of our relatively low credit ratings,
our borrowing costs may increase and our ability to incur additional debt may
be impaired.

OTHER INFORMATION

Labor Relations

We are in the process of negotiating with the Air Line Pilots Association
(ALPA) on a new contract for AWAs pilots. The parties are currently in
mediation under the auspices of the National Mediation Board (NMB). The
existing contract with ALPA became amendable in May 2000. In addition, we are
in negotiations with the International Brotherhood of Teamsters (IBT) on a
first contract covering our stock clerks, a work group of approximately 60
employees. The parties are currently in mediation under the auspices of the
NMB. We cannot predict the form of these future collective bargaining
agreements and therefore the effect, if any, on our operations or financial
performance.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

In response to an application filed by IBT, the NMB has scheduled a
representation election among the approximately 4,000 passenger service
employees of AWA and TLC. The election will be conducted telephonically from
the end of October through early November. We cannot predict the outcome of
this election.

Application of Critical Accounting Policies

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



| |  |  | Passenger Revenue  Passenger revenue is recognized when
transportation is provided. Ticket sales for transportation that has
not yet been provided are recorded as air traffic liability. Passenger
traffic commissions and related fees are expensed when the related
revenue is recognized. Passenger traffic commissions and related
fees not yet recognized are included as a prepaid expense. Due to complex
pricing structures, refund and exchange policies, and interline agreements
with other airlines, certain amounts are recognized in revenue using
estimates regarding both the timing of the revenue recognition and the
amount of revenue to be recognized. These estimates are generally based
on the statistical analysis of our historical data. Any adjustments
resulting from periodic evaluations of the estimated air traffic liability
are included in results of operations during the period in which the
evaluations are completed.                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Accounting For Long-Lived Assets  Owned property and equipment are
recorded at cost and depreciated to residual values over the estimated
useful lives using the straight-line method. Leasehold improvements
relating to flight equipment and other property on operating leases are
amortized over the life of the lease, or the life of the asset,
whichever is shorter. Interest on advance payments for aircraft
acquisitions and on expenditures for aircraft improvements is
capitalized and added to the cost of the asset. The estimated useful
lives of our owned aircraft, jet engines, flight equipment and rotable
parts range from five to 30 years. The estimated useful lives of our
technical support facility and flight training center in Phoenix,
Arizona are 22 years and 30 years, respectively. The estimated useful
lives of our ground property and equipment range from three to 12 years.
We test for impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might be impaired
as defined by SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets.An impairment loss is recognized if the carrying
amount of the asset is not recoverable from its undiscounted cash flows
and is measured as the difference between the carrying amount and fair
value of the asset.
|
| |  |  | Frequent Flyer Accounting  We maintain a frequent travel award
program known as FlightFund that provides a variety of awards to
program members based on accumulated mileage. The estimated cost of
providing the free travel is recognized as a liability and charged to
operations as program members accumulate mileage. Travel awards are
valued at the incremental cost of carrying one passenger, based on
expected redemptions. Incremental costs are based on expectations of
expenses to be incurred on a per passenger basis and include fuel,
liability insurance, food, beverages, supplies and ticketing costs. We
also sell mileage credits to companies participating in its FlightFund
program, such as hotels, car rental agencies and credit card companies.
Transportation-related revenue from the sale of mileage credits is
deferred and recognized when transportation is provided. A change to
the estimated cost per mile, minimum award level, percentage of revenue
to be deferred or deferred recognition period could have a significant
impact on our revenues or mileage liability accrual in the year of the
change as well as future years.                                                                                                                                                                                                       

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002



| |  |  | Long-Term Maintenance
Reserve  We record an accrual for the
estimated cost of scheduled airframe and engine overhauls required to be
performed on leased aircraft upon their return to the lessors. These
estimates are based on historical costs and our assumptions regarding
the renewal of aircraft leases. A significant change to the Airlines
fleet plan could have a material impact on our reserve requirements.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Related Party Transactions

As part of our reorganization in 1994, Continental Airlines and AWA
entered into an alliance agreement which included code sharing arrangements,
reciprocal frequent flyer programs and ground handling operations. In March
2002, AWA received notice from Continental of its intention to terminate the
code sharing and frequent flyer agreements between the two airlines, effective
April 26, 2002. Two of Continentals directors are managing partners of Texas
Pacific Group, which, through TPG Advisors, Inc., effectively controls the
voting power of Holdings. See Risk Factors  The stockholders who effectively
control the voting power of Holdings could take actions that would favor their
own personal interests to the detriment of our interests.AWA paid
Continental approximately $6.4 million and also received approximately $4.1
million in the third quarter of 2002 from Continental pursuant to these
agreements. In the third quarter of 2001, the amount paid to and received from
Continental pursuant to these agreements was $7.0 million and $4.8 million,
respectively.

Recently Issued Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections
as of April 2002. This standard rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that Statement,
SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements and excludes extraordinary item treatment for gains and
losses associated with the extinguishment of debt that do not meet the APB
Opinion No. 30, Reporting the Results of Operations    Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions (APB 30) criteria.
Any gain or loss on extinguishment of debt that was classified as an
extraordinary item in prior periods presented that does not meet the criteria
in APB 30 for classification as an extraordinary item shall be reclassified.
SFAS No. 145 also amends SFAS No. 13, Accounting for Leases, as well as
other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability
under changed conditions. The Company is required to adopt SFAS No. 145
effective January 1, 2003 and does not expect that it will have a material
impact on its financial condition or results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This standard addresses
financial accounting and reporting for costs associated with exit or disposal
activities and replaces Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to
Exit an Activity (including Certain Costs Incurred in a Restructuring)
(EITF 94-3). SFAS No. 146 requires that a liability for costs associated
with an exit or disposal activity be recognized when the liability is
incurred. Under EITF 94-3, a liability for exit costs, as defined in EITF
94-3, was recognized at the date of an entitys commitment to an exit plan.
The provisions of SFAS No. 146 are effective for exit or disposal activities
that are initiated by the Company after December 31, 2002.

Forward Looking Information

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

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002



| |  |  | the continuing impact of the terrorist attacks of September 11, 2001,
the potential impact of any future terrorist attacks and government
responses;                                                                                                                                  
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the ability of the Company to obtain sufficient additional financing
if necessary to survive the current soft economic conditions;                                                                                                                                                    
|
| |  |  | limitations on financing flexibility due to high levels of debt,
financial and other covenants in debt instruments, cross default
provisions and the potential dilutive impact of the warrants and
convertible notes issued in connection with the term loan and related
transactions;
|
| |  |  | the cyclical nature of the airline industry;                                                                                                                                                                                                                                          
|
| |  |  | competitive practices in the industry;                                                                                                                                                                                                                                                
|
| |  |  | the impact of changes in fuel prices;                                                                                                                                                                                                                                                 
|
| |  |  | relations with unionized employees generally and the impact of the
process of negotiation of labor contracts on our operations; and                                                                                                                                                   
|
| |  |  | the outcome of negotiations on collective bargaining agreements.                                                                                                                                                                                                                      

For additional discussion of such risks see Risk Factors Related to
America West and Industry Related Risksbelow. Any forward-looking statements
speak only as of the date of this report.

Risk Factors Relating to America West and Industry Related Risks

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

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



| |  | The adverse impact that terrorist attacks, and the resulting government
responses, will have on the travel industry and the economy in general;                                                                                                                                                                                       
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | The potential increase in fuel costs and decrease in availability of fuel
if oil-producing countries are affected by the aftermath of the terrorist
attacks, including the governments responses, and the ability of our
fuel-hedging program to manage this risk;                                                                   
| 
| |  | Our ability to reduce our operating costs, conserve financial resources
and to continue implementing our restructuring plan, taking into account
the cost increases (including significant increases in the cost of
aviation insurance) expected to result from the aftermath of the terrorist
attacks and the governments responses;
| 
| |  | Any resulting decline in the value of the aircraft in our fleet;                                                                                                                                                                                                                                                                      
| 
| |  | The number of crew members who may be called for duty in the reserve
forces of the armed services and the resulting impact on our ability to
operate as planned; and                                                                                                                                                                  

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002



| |  | The scope and nature of any future terrorist attacks and government
responses.
|- |  | ------------------------------------------------------------------------------

Future terrorist attacks and government responses to terrorist activity,
including war or other hostilities, could further reduce demand for air travel,
increase our costs and generally impact our liquidity or financial condition.
Our ability to obtain additional financing to absorb the impact of the
terrorist attacks, any government response to terrorist activity and any future
terrorist attacks, is limited by the constraints imposed by our existing debt,
reductions in the value of our aircraft and our relatively low credit ratings.

As a result of the terrorist attacks of September 11, 2001, insurers have
significantly reduced the maximum amount of insurance coverage available to
commercial airlines for liability to persons other than employees or passengers
for claims resulting from acts of terrorism, war or similar events. At the
same time premiums for such insurance coverage and other types of insurance
coverage for commercial airlines have increased significantly. In addition,
the terrorist attacks of September 11, 2001 resulted in staggering losses to
the insurance industry, causing a general instability in that industry that
could affect some of our existing insurance carriers or ability to obtain
further insurance coverage. To the extent that available insurance coverage is
reduced, premiums are increased or our existing insurance carriers are unable
to provide the insurance coverage contracted for our operating results may be
adversely impacted.

We have sustained significant operating losses and expect to continue to
sustain significant losses in the near-term.

The soft economic conditions coupled with the terrorist attacks of
September 11, 2001 have had a substantial negative impact on our revenues and
costs. Our revenues for the first nine months of 2002 have declined 8.5% as
compared to the first nine months of 2001 and 13.9% compared to the first nine
months of 2000. In addition, we have experienced an increase in costs related
to enhanced security measures, aviation insurance and airport rents and landing
fees. We do not expect our revenues to increase significantly until general
economic conditions improve. In addition, we expect the threat of further
terrorist attacks to continue to negatively impact our revenues and costs in
the near-term and we expect a further decline in the demand for air travel and
a potentially substantial increase in fuel costs to occur if the United States
commences hostilities against Iraq. We may not be able to effectively counter
act decreasing revenues and increasing costs through our cost reduction
initiatives, customer service initiatives and revised pricing structures.
Moreover, our liquidity and borrowing options are limited and we may not be
able to survive a prolonged economic downturn, further decreases in demand for
air travel or substantial increases in fuel costs.

Our high level of debt and fixed costs limits our ability to fund general
corporate requirements, limits our flexibility in responding to competitive
developments and increases our vulnerability to adverse economic and industry
conditions.

As of September 30, 2002, we owed approximately $732.2 million of debt. On
January 18, 2002, AWA closed a $429 million loan supported by a $380 million
government loan guarantee and converted its existing credit facility into an
$89.9 million term loan maturing in 2007 and Holdings issued approximately
$104.5 million aggregate principal amount of its 7.5% convertible senior notes
due 2009. In July 2002, AWA made a mandatory repayment of approximately $16.7
million on its $89.9 million term loan as a result of a decrease in the fair
market value of the assets securing the loan following the terrorist attacks of
September 11, 2001. In addition, we have incurred significant capitalized and
operating lease obligations in connection with the financing of aircraft and
the lease of airport and other facilities. We also have fixed costs associated
with our regional alliances with Mesa Airlines and Chautauqua Airlines. As a
result of our high leverage:



| |  |  | We have only a limited ability to obtain additional financing, if
needed. Our existing debt is secured by a substantial portion of our
assets, leaving us with limited assets to use to obtain additional
financing. In addition, the terms of both the government-guaranteed loan
and the credit facility restrict our or AWAs ability to incur
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002



| |   |  | additional indebtedness or issue equity unless we use the proceeds of
those transactions to prepay the government guaranteed loan and the
credit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Our ability to fund general corporate requirements, including capital
expenditures, may be impaired. We have substantial obligations to pay
principal and interest on our debt and other recurring fixed costs.
Further, we may be required to prepay portions of the government
guaranteed loan if our employee compensation costs exceed a certain
threshold. Accordingly, we may have to use our working capital to fund
such payments and costs instead of funding general corporate
requirements. In addition, because under the terms of certain of AWAs
indebtedness, AWA must maintain a minimum cash balance of $100 million,
we cannot use all of our available cash to fund operations, capital
expenditures and cash obligations without violating this minimum cash
balance requirement.
|
| |  |  | Our ability to respond to competitive developments and adverse
economic conditions may be limited. Without the ability to obtain
additional financing and with substantial fixed costs, we may not be
able to fund the capital expenditures, including the purchase of new
aircraft, required to keep us competitive or to withstand prolonged
adverse economic conditions.                                                                                                                                                                                                                                                                                                                                                                                                                           

Moreover, our flexibility is limited because many of the agreements
governing our indebtedness contain negative covenants that restrict our ability
to take certain actions as well as financial covenants that require us to meet
certain financial tests, including the minimum cash balance requirements
discussed above. A breach of these covenants or a failure to make any required
payments under our indebtedness or certain of our aircraft leases could result
in the acceleration of a substantial portion of our indebtedness. In the event
of an acceleration of our indebtedness, it is likely that credit card companies
would begin to withhold proceeds due to us from the sale of our tickets and our
lessors may attempt to exercise remedies under their respective leases. In such a
situation, it is unlikely we would be able to repay the accelerated
indebtedness or make required lease payments.

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

The price and supply of jet fuel are unpredictable and fluctuate based on
events outside our control, including geopolitical developments, regional
production patterns and environmental concerns. Since fuel is the principal
raw material used in our business, accounting for 14.4% of our total operating
expenses in 2001, price escalations or reductions in the supply of jet fuel
will increase our operating expenses and cause our operating results and net
income to decline. For example, with our current level of fuel consumption, a
one-cent per gallon increase in jet fuel prices will cause our annual operating
expense to increase by $4.2 million.

We have implemented a fuel-hedging program to manage the risk and effect
of fluctuating jet fuel prices on our business. Our hedging program is
intended to offset increases in jet fuel costs by using derivative instruments
keyed to the future price of heating oil, which is highly correlated to the
price of jet fuel delivered on the East Coast. Our hedging program does not
fully protect us against increasing jet fuel costs because our hedging program
does not cover all of our projected fuel volumes for 2002. Furthermore, our
ability to effectively hedge fuel prices is limited because we purchase a
substantially larger portion of our jet fuel requirements on the West Coast
than our large competitors and West Coast fuel prices are less correlated to
heating oil prices and other viable petroleum derivatives than East Coast fuel
prices and, therefore, more difficult to hedge. The effectiveness of our
fuel-hedging program may also be negatively impacted by a commencement of
hostilities against Iraq and terrorist activity, including the aftermath of the
terrorist attacks of September 11, 2001 and the resulting government responses.
See The September 11, 2001 terrorist attacks have had, and continue to have,
a material adverse effect on our financial condition, operations and
prospects.

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

Our credit ratings are relatively low with Moodys assessment of AWAs
senior implied rating and senior unsecured debt rating at Caa3 and Ca,
respectively, and Standard & Poors ratings at B- for Holdings and CCC for

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

AWAs senior unsecured debt. Low credit ratings could cause our borrowing
costs to increase, which would increase our interest expense and could affect
our net income. In addition, our credit ratings could adversely affect our
ability to obtain additional financing. See Our high level of debt and fixed
costs limits our ability to fund general corporate requirements, limits our
flexibility in responding to competitive developments and increases our
vulnerability to adverse economic and industry conditions. The rating
agencies base their ratings on our financial performance and operations, our
cash flow and liquidity, the level of our debt and industry conditions in
general. If our financial performance or industry conditions do not improve,
we may face future downgrades, which could further negatively impact our
borrowing costs and the prices of our equity or debt securities.

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

Some of our employees are represented by unions. We currently are
negotiating collective bargaining agreements with the Air Line Pilots
Association, or ALPA, which represents all of our approximately 1,600 pilots,
and the International Brotherhood of Teamsters, or IBT, which represents all of
our approximately 60 stock clerks. On May 2, 2001, we filed for federal
mediation with the National Mediation Board, or NMB, to facilitate contract
negotiation with ALPA and on August 8, 2001, the IBT filed for mediation with
the NMB in connection with the stock clerk negotiations. We cannot predict the
outcome of the federal mediation or negotiations with ALPA or IBT. In
addition, other groups of employees may seek union representation. We cannot
predict the outcome of any future negotiations relating to union representation
or collective bargaining agreements. Agreements reached in collective
bargaining may increase operating expenses and lower operating results and net
income. This is particularly significant because our current employee costs
contribute substantially to the low cost structure that we believe is one of
our competitive strengths and because the terms of the government guaranteed
loan restricts the amount we can spend on employee compensation. In addition,
negotiations with unions could divert management attention and disrupt
operations, which
may result in increased operating expenses and lower net income. If we
are unable to negotiate acceptable collective bargaining agreements, we might
have to address the threat of, or wait through cooling off periods, which
could be followed by union-initiated work actions, including strikes.
Depending on the nature of the threat or the type and duration of any work
action, these actions could disrupt our operations and, as a result, have a
significant adverse affect on our operating results.

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

Our indebtedness under both the government-guaranteed loan and our
existing $73.2 million term loan bears interest at fluctuating interest rates
based on the London interbank offered rate for deposits of U.S. dollars, or
LIBOR. LIBOR tends to fluctuate based on general economic conditions, general
interest rates, including the prime rate, and the supply of and demand for
credit in the London interbank market. We have not hedged our interest rate
exposure and, accordingly, our interest expense for any particular period may
fluctuate based on LIBOR. To the extent LIBOR increases, our interest expense
will increase, in which event, we may have difficulties making interest
payments and funding our other fixed costs and our available cash flow for
general corporate requirements may be adversely affected.

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

The airline industry is heavily regulated. Both federal and state
governments from time to time propose laws and regulations that impose
additional requirements and restrictions on airline operations. Implementing
these measures, such as aviation ticket taxes and passenger safety measures,
has increased operating costs for us and the airline industry as a whole. In
addition, new security measures imposed by the U.S. Federal Aviation
Administration, or FAA, as a result of the recent terrorist attacks are
expected to continue to increase costs for us and the airline industry as a
whole. Depending on the implementation of these and other laws, our operating
costs could increase significantly. In addition, certain governmental agencies,
such as the Department of Transportation, or DOT, and the FAA have the
authority to impose mandatory orders, such as Airworthiness Directives in
connection with our

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

aircraft, and civil penalties for violations of applicable
laws and regulations, each of which can result in material costs and adverse
publicity. We cannot predict which laws and regulations will be adopted or
what other action regulators might take. Accordingly, we cannot guarantee that
future legislative and regulatory acts will not have a material impact on our
operating results.

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

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

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

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

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

Many of our executive officers are key to the management of our business
and operations. Our future success depends on our ability to retain these
officers and other capable managers. Although we believe we could replace key
personnel given adequate prior notice, the unexpected departure of key
executive officers could cause substantial disruption to our business and
operations. In addition, we may not be able to retain and recruit talented
personnel without incurring substantial costs. Moreover, in connection with
the government guaranteed loan, we agreed to limit the amount of compensation
we provide to our executives. As a result, our ability to spend additional
amounts to retain and recruit talented personnel is limited.

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

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

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002

Conversion of the notes or exercise of the warrants issued in connection
with the government-guaranteed loan and related transactions will dilute the
ownership interests of existing stockholders.

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




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Sensitive Instruments



|(a) |  | Commodity Price Risk
|--- |  | --------------------

As of September 30, 2002, the Company had entered into costless collar
transactions which establish an upper and lower limit on heating oil futures
prices. These transactions are in place with respect to approximately 62% of
remaining projected 2002 fuel requirements, 37% of projected fuel requirements
for the first quarter of 2003 and 25% of projected fuel requirements for the
second quarter of 2003.

The use of such transactions in the Companys fuel hedging program could
result in the Company not fully benefiting from certain declines in heating oil
futures prices. At September 30, 2002, the Company estimates that a 10%
increase in heating oil futures prices would increase the fair value of the
costless collar transactions by approximately $5.2 million. The Company
estimates that a 10% decrease in heating oil futures prices would decrease the
fair value of the costless collar transactions by approximately $0.8 million.

As of October 17, 2002, approximately 62% of AWAs remaining 2002 fuel
requirements are hedged.



|(b) |  | Interest Rate Risk
|--- |  | ------------------

The Companys exposure to interest rate risk relates primarily to its
variable rate long-term debt obligations. At September 30, 2002 the Companys
variable-rate long-term debt obligations of approximately $569 million
represented approximately 79.3% of its total long-term debt. If interest rates
increased 10% in 2002, the impact on the Companys results of operations would
not be material.




ITEM 4. CONTROLS AND PROCEDURES



| | a. |  | Evaluation of Disclosure Controls and Procedures                                                                                                                                                                                                                                                                                                                                      
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Based on their evaluation of our disclosure controls and procedures
conducted within 90 days of the date of filing this report on Form 10-Q,
our Chief Executive Officer and the Chief Financial Officer have concluded
that our disclosure controls and procedures (as defined in Rules 13a-14(c)
and 15d-14(c) promulgated under the Securities Exchange Act of 1934) are
effective.
|
| | b. |  | Changes in Internal Controls                                                                                                                                                                                                                                                                                                                                                          
|
| |    |  | There were no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the
date of their evaluation.                                                                                                                                                                                                             

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
September 30, 2002




PART II  OTHER INFORMATION




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



| |  |  | None.
| |  |  | -----




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



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

|        |  |                                                                                                                                  
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                  
|NUMBER  |  | DESCRIPTION AND METHOD OF FILING                                                                                                 
|        |  |                                                                                                                                  
|99.1    |  | Certification of Holdings Chief Executive Officer, W.
Douglas Parker, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|       
|       
|       
|       
|        |  |                                                                                                                                  
|       
|       
|       
|       
|99.2    |  | Certification of Holdings Chief Financial Officer,
Derek J. Kerr, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.    
|       
|       
|       
|       
|        |  |                                                                                                                                  
|       
|       
|       
|       
|99.3    |  | Certification of AWAs Chief Executive Officer, W.
Douglas Parker, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.    
|       
|       
|       
|       
|        |  |                                                                                                                                  
|       
|       
|       
|       
|99.4    |  | Certification of AWAs Chief Financial Officer, Derek
J. Kerr, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.        



| | b. |  | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                      
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Holdings filed a report on Form 8-K, dated August 9, 2002, furnishing
under Item 7 the statements under oath of Chief Executive Officer, W.
Douglas Parker, and Chief Financial Officer, Bernard L. Han, in
response to the Securities and Exchange Commissions order requiring
the filing of sworn statements pursuant to Section 21(a)(1) of the
Securities Exchange Act of 1934 (SEC File No. 4-460).
|
| |    |  | Holdings and AWA filed a report on Form 8-K, dated October 11, 2002,
furnishing under Item 5 a press release, dated September 30, 2002,
announcing that Derek J. Kerr has been elected new Chief Financial
Officer of the two companies replacing Bernard L. Han, who has
resigned effective October 14, 2002.                                                                                           

38



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AMERICA WEST HOLDINGS CORPORATION
September 30, 2002




SIGNATURE

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

|                        |  |                                   |  |                                                                                  
|----------------------- |  | --------------------------------- |  | ---------------------------------------------------------------------------------
|                        |  | AMERICA WEST HOLDINGS CORPORATION
|                       
|                       
|                       
|                       
|                        |  |                                   |  |                                                                                  
|                       
|                       
|                       
|                       
|                        |  |                                   |  |                                                                                  
|                       
|                       
|                       
|                       
|                        |  | By                                |  | /s/ Derek J. Kerr
Derek J. Kerr
Senior Vice President and Chief Financial Officer
|                       
|                       
|                       
|                       
|                        |  |                                   |  |                                                                                  
|                       
|                       
|                       
|                       
|DATED: October 17, 2002 |  |                                   |  |                                                                                  

CERTIFICATIONS

I, W. Douglas Parker, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of America West
Holdings Corporation;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

39



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AMERICA WEST HOLDINGS CORPORATION
September 30, 2002

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                       |  |                                                                
|---------------------- |  | ---------------------------------------------------------------
|Date: October 17, 2002 |  | /s/ W. Douglas Parker
W. Douglas Parker
Chief Executive Officer

I, Derek J. Kerr, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of America West
Holdings Corporation;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

40



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AMERICA WEST HOLDINGS CORPORATION
September 30, 2002

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                       |  |                                                                                  
|---------------------- |  | ---------------------------------------------------------------------------------
|Date: October 17, 2002 |  | /s/ Derek J. Kerr
Derek J. Kerr
Senior Vice President and Chief Financial Officer

41



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AMERICA WEST AIRLINES, INC.
September 30, 2002

SIGNATURE

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

|                        |  |                             |  |                                                                                  
|----------------------- |  | --------------------------- |  | ---------------------------------------------------------------------------------
|                        |  | AMERICA WEST AIRLINES, INC.
|                       
|                       
|                       
|                       
|                        |  |                             |  |                                                                                  
|                       
|                       
|                       
|                       
|                        |  |                             |  |                                                                                  
|                       
|                       
|                       
|                       
|                        |  | By                          |  | /s/ Derek J. Kerr
Derek J. Kerr
Senior Vice President and Chief Financial Officer
|                       
|                       
|                       
|                       
|                        |  |                             |  |                                                                                  
|                       
|                       
|                       
|                       
|DATED: October 17, 2002 |  |                             |  |                                                                                  

CERTIFICATIONS

I, W. Douglas Parker, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of America West
Airlines, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

42



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AMERICA WEST AIRLINES, INC.
September 30, 2002

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                       |  |                                                                
|---------------------- |  | ---------------------------------------------------------------
|Date: October 17, 2002 |  | /s/ W. Douglas Parker
W. Douglas Parker
Chief Executive Officer

I, Derek J. Kerr, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of America West
Airlines, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

43



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AMERICA WEST AIRLINES, INC.
September 30, 2002

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                       |  |                                                                                  
|---------------------- |  | ---------------------------------------------------------------------------------
|Date: October 17, 2002 |  | /s/ Derek J. Kerr
Derek J. Kerr
Senior Vice President and Chief Financial Officer

44



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##### Table of Contents






Exhibit Index

|        |  |                                                                                                                                  
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                  
|NUMBER  |  | DESCRIPTION
AND METHOD OF FILING                                                                                                 
|        |  |                                                                                                                                  
|99.1    |  | Certification of Holdings Chief Executive Officer, W.
Douglas Parker, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|       
|       
|       
|       
|        |  |                                                                                                                                  
|       
|       
|       
|       
|99.2    |  | Certification of Holdings Chief Financial Officer,
Derek J. Kerr, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.    
|       
|       
|       
|       
|        |  |                                                                                                                                  
|       
|       
|       
|       
|99.3    |  | Certification of AWAs Chief Executive Officer, W.
Douglas Parker, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.    
|       
|       
|       
|       
|        |  |                                                                                                                                  
|       
|       
|       
|       
|99.4    |  | Certification of AWAs Chief Financial Officer, Derek
J. Kerr, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.