<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
   
                                    FORM 10-Q/A
                                  AMENDMENT 1
    

(MARK ONE)

   X           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
--------       SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED  JUNE 30, 1998  OR

               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                        1-10140


                           AMERICA WEST AIRLINES, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

         DELAWARE                                        86-0418245

(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

    4000 EAST SKY HARBOR BLVD,            PHOENIX, ARIZONA           85034
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                          (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE    (602) 693-0800


                                       N/A
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)

INDICATE BY CHECK MARK WHETHER THE 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
     ----                      ----

INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT.

YES   XX                   NO
     ----                      ----

THE COMPANY HAS 1,000 SHARES OF CLASS B COMMON STOCK OUTSTANDING AS OF 
JULY 31, 1998.

THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF AMERICA WEST HOLDINGS CORPORATION,
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1) (A) AND (B) OF FORM
10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT
TO GENERAL INSTRUCTION H (2).
<PAGE>   2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                           AMERICA WEST AIRLINES, INC.
                            CONDENSED BALANCE SHEETS
                        (IN THOUSANDS EXCEPT SHARE DATA)

   
<TABLE>
<CAPTION>
                                                                                                        JUNE 30,       DECEMBER 31,
ASSETS                                                                                                    1998             1997
------                                                                                                    ----             ----
<S>                                                                                                   <C>              <C>
                                                                                                      (Unaudited)
Current assets:
    Cash and cash equivalents .................................................................       $  165,079       $  171,638
    Short-term investments ....................................................................           64,423             --
    Accounts receivable, net ..................................................................           96,562           88,138
    Advances to parent company and affiliate, net..............................................           48,001             -- 
    Expendable spare parts and supplies, net ..................................................           27,141           27,135
    Prepaid expenses ..........................................................................           34,537           36,917
                                                                                                      ----------       ----------

        Total current assets ..................................................................          435,743          323,828
                                                                                                      ----------       ----------

Property and equipment:
    Flight equipment ..........................................................................          839,851          783,384
    Other property and equipment ..............................................................          140,482          143,172
    Equipment purchase deposits ...............................................................           48,936           45,246
                                                                                                      ----------       ----------
                                                                                                       1,029,269          971,802
    Less accumulated depreciation and amortization ............................................          337,933          276,430
                                                                                                      ----------       ----------

        Net property and equipment ............................................................          691,336          695,372
                                                                                                      ----------       ----------

Other assets:
    Restricted cash ...........................................................................           29,931           57,158
    Reorganization value in excess of amounts allocable to
        identifiable assets, net ..............................................................          321,645          363,268
    Deferred income taxes .....................................................................           74,700           74,700
    Other assets, net .........................................................................           66,263           33,005
                                                                                                      ----------       ----------

        Total other assets ....................................................................          492,539          528,131
                                                                                                      ----------       ----------
                                                                                                      $1,619,618       $1,547,331
                                                                                                      ==========       ==========
</TABLE>
    


            See accompanying notes to condensed financial statements.


                                        2
<PAGE>   3
                           AMERICA WEST AIRLINES, INC.
                            CONDENSED BALANCE SHEETS
                        (IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 JUNE 30,       DECEMBER 31,
                                                                   1998             1997
                                                                   ----             ----
<S>                                                            <C>              <C>
                                                               (Unaudited)
              LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
    Current maturities of long-term debt ...............       $   46,924       $   54,000
    Accounts payable ...................................          104,848          140,908
    Air traffic liability ..............................          211,870          173,149
    Accrued compensation and vacation benefits .........           41,150           37,277
    Accrued taxes ......................................           82,748           36,376
    Other accrued liabilities ..........................           64,921           43,574
                                                               ----------       ----------

        Total current liabilities ......................          552,461          485,284
                                                               ----------       ----------

Long-term debt, less current maturities ................          227,438          272,760
Deferred credits and other liabilities .................           98,405          104,519

Commitments and contingencies

Stockholder's equity:
    Common Stock $.01 par value.  Authorized, issued and
        outstanding; 1,000 shares ......................             --               --
    Additional paid-in capital .........................          533,650          539,301
    Retained earnings ..................................          207,664          145,467
                                                               ----------       ----------

        Total stockholder's equity .....................          741,314          684,768
                                                               ----------       ----------
                                                               $1,619,618       $1,547,331
                                                               ==========       ==========
</TABLE>


            See accompanying notes to condensed financial statements.


                                       3
<PAGE>   4
                           AMERICA WEST AIRLINES, INC.
                         CONDENSED STATEMENTS OF INCOME
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                 JUNE 30,                          JUNE 30,
                                                           1998             1997             1998             1997
                                                           ----             ----             ----             ----
<S>                                                     <C>              <C>              <C>              <C>
Operating revenues:
    Passenger ...................................       $ 491,042        $ 450,753        $ 934,834        $ 886,293
    Cargo .......................................          11,887           12,054           24,492           24,810
    Other .......................................          16,560           14,949           31,116           28,840
                                                        ---------        ---------        ---------        ---------
        Total operating revenues ................         519,489          477,756          990,442          939,943
                                                        ---------        ---------        ---------        ---------

Operating expenses:
    Salaries and related costs ..................         112,262          102,326          217,846          203,343
    Aircraft rents ..............................          60,195           55,089          118,940          110,021
    Other rents and landing fees ................          28,794           28,862           58,252           59,678
    Aircraft fuel ...............................          47,798           57,608           98,082          126,724
    Agency commissions ..........................          34,900           40,452           66,517           78,764
    Aircraft maintenance materials and repairs ..          44,041           37,669           86,469           68,981
    Depreciation and amortization ...............          12,765           12,348           25,063           24,425
    Amortization of excess reorganization value .           4,974            6,256            9,948           12,511
    Other .......................................          99,968           86,563          187,710          171,450
                                                        ---------        ---------        ---------        ---------
        Total operating expenses ................         445,697          427,173          868,827          855,897
                                                        ---------        ---------        ---------        ---------

Operating income ................................          73,792           50,583          121,615           84,046
                                                        ---------        ---------        ---------        ---------

Nonoperating income (expenses):
    Interest income .............................           6,041            4,390           11,086            8,630
    Interest expense, net .......................          (8,263)         (12,059)         (17,935)         (24,140)
    Other, net ..................................               -             (168)            (264)             128
                                                        ---------        ---------        ---------        ---------
        Total nonoperating expenses, net ........          (2,222)          (7,837)          (7,113)         (15,382)
                                                        ---------        ---------        ---------        ---------

Income before income taxes ......................          71,570           42,746          114,502           68,664
                                                        ---------        ---------        ---------        ---------

Income taxes ....................................          31,381           19,749           49,921           31,723
                                                        ---------        ---------        ---------        ---------

Net income ......................................       $  40,189        $  22,997        $  64,581        $  36,941
                                                        =========        =========        =========        =========
</TABLE>



            See accompanying notes to condensed financial statements.


                                       4
<PAGE>   5
                           AMERICA WEST AIRLINES, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED
                                                                         JUNE 30,
                                                                  1998             1997
                                                                  ----             ----
<S>                                                            <C>              <C>      
Net cash provided by operating activities ..............       $ 187,220        $  88,846
                                                               ---------        ---------
Cash flows from investing activities:
    Purchases of property and equipment ................         (67,215)         (76,459)
    Sales (purchases) of short-term investments ........         (64,423)          38,075
    Equipment purchase deposits and other ..............         (10,456)          (6,345)
                                                               ---------        ---------
        Net cash used in investing activities ..........        (142,094)         (44,729)
                                                               ---------        ---------

Cash flows from financing activities:
    Repayment of debt ..................................         (45,634)         (21,624)
    Repurchase of warrants .............................          (5,651)         (13,342)
    Other ..............................................            (400)              --
                                                               ---------        ---------
       Net cash used in financing activities ...........         (51,685)         (34,966)
                                                               ---------        ---------

Net increase (decrease) in cash and cash equivalents ...          (6,559)           9,151
                                                               ---------        ---------

Cash and cash equivalents at beginning of period .......         171,638          137,499
                                                               ---------        ---------

Cash and cash equivalents at end of period .............       $ 165,079        $ 146,650
                                                               =========        =========

Cash, cash equivalents and short-term investments at
    end of period ......................................       $ 229,502        $ 147,706
                                                               =========        =========

Cash paid for:
    Interest, net of amounts capitalized ...............       $  11,898        $  15,978
                                                               =========        =========
    Income taxes .......................................       $   4,211        $     132
                                                               =========        =========

Non-cash financing activities:
    Notes payable issued for equipment purchase deposits       $   3,500        $  16,553
                                                               =========        =========
    Notes payable canceled under the aircraft
        purchase agreement .............................       $ (10,309)       $    --
                                                               =========        =========
</TABLE>


            See accompanying notes to condensed financial statements.


                                       5
<PAGE>   6
                           AMERICA WEST AIRLINES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 1998

1.   BASIS OF PRESENTATION

         The unaudited condensed financial statements included herein have been
prepared by America West Airlines, Inc., ("AWA" or the "Company"), a
wholly-owned subsidiary of America West Holdings Corporation ("Holdings"),
pursuant to the rules and regulations of the Securities and Exchange Commission
and do not include all information and footnotes required by generally accepted
accounting principles. 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, 1997.

2.    FLIGHT EQUIPMENT

         AIRCRAFT PURCHASE AGREEMENT AMENDMENT   In April 1998, AWA and AVSA 
executed Amendment No. 1 to the aircraft purchase agreement which provided for 
the reduction of the firm order of Airbus aircraft from 34 to 29. The aggregate 
net cost of firm commitments remaining is approximately 1.0 billion based on a 
3.5 percent annual price escalation.

         ENGINE HUSH KITS   In May 1998, AWA entered into an agreement to
purchase 14 737 hush kits at an aggregate net cost of approximately $14
million to comply with Federal Aviation Administration's ("FAA") Stage III noise
reduction requirements. Delivery of the hush kits began in May 1998 and will
continue through the first quarter of 1999. As of June 30, 1998, one aircraft
has been outfitted with a hush kit.

         ENGINE MAINTENANCE AGREEMENT   In April 1998, AWA entered into a
long-term maintenance agreement to have certain aircraft engines maintained on a
flight hour basis.

3.    BOND FINANCING

         In April 1998 AWA completed the refunding of its $29.3 million variable
rate industrial development revenue bonds due 2016 ("old bonds") by issuing
$29.3 million of 6.3 percent fixed rate industrial development revenue bonds due
April 2023 ("new bonds"). Interest on the new bonds is payable semiannually
(April 1 and October 1) and commences on October 1, 1998. The new bonds are
subject to optional redemption prior to the maturity date on or after April 1,
2008, in whole or in part, on any interest payment date at the following
redemption prices: 102 percent on April 1 or October 1, 2008; 101 percent on
April 1 or October 1, 2009; and 100 percent on April 1, 2010 and thereafter. As
a result of the refinancing, $29.9 million of cash, which secured the
irrevocable direct pay letter of credit that backed the old bonds, was released
and available for general corporate purposes.


                                       6
<PAGE>   7
                           AMERICA WEST AIRLINES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 1998

4.    PASSENGER COMMISSIONS

         Effective May 1, 1998, AWA revised its eight percent travel agent
commission program to limit commissions paid to a maximum $50 payment per round
trip and a maximum $25 payment per one way itinerary on all tickets issued in
the United States and Canada. AWA also announced a new Internet commission
policy which offers to all online vendors selling AWA travel a five percent
commission with a maximum $10 payment.

5.    ADVANCES TO PARENT COMPANY AND AFFILIATE

         As of June 30, 1998, AWA has advanced to Holdings $56.3 million. In 
addition, AWA has net obligations of $8.3 million due to The Leisure Company 
("Leisure Co."), a wholly owned subsidiary of Holdings. All amounts bear 
interest at market rates. 

6.    SUBSEQUENT EVENTS

         MESA CODE SHARE AGREEMENT    In July 1998, AWA entered into a
codesharing agreement with Mesa Airlines ("Mesa") whereby Mesa serves as a
feeder carrier for AWA to provide America West Express regional airline service
from AWA's Phoenix hub using Canadair regional jets, deHavilland turboprops, and
Hawker-Beech 1900 aircraft. The agreement contemplates adding regional
operations in the airline's hubs in Las Vegas and Columbus. The codesharing
agreement with Mesa provides for convenient flight schedules, passenger handling
and computer reservations under AWA flight designator code. The Mesa agreement
will be in effect through August 2004.

         FAA SETTLEMENT    On July 15, 1998, AWA and the FAA entered into an
agreement to settle disputes over alleged maintenance violations. Under the
agreement, AWA did not admit any wrongdoing, will implement certain changes in
maintenance oversight and will pay a civil penalty of $2.5 million. An
additional civil penalty of $2.5 million will be forgiven upon implementation of
the terms of the agreement. AWA's response to the FAA initiatives as well as
protracted labor negotiations resulted in a deterioration in AWA's on time
performance and schedule completion in late June and in July 1998.

         AIRCRAFT LEASES    In July 1998, AWA entered into aircraft lease
arrangements for two B737-300 aircraft with lease terms of five and six years,
respectively.


                                       7
<PAGE>   8
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998


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

RESULTS OF OPERATIONS

         In January 1998, Leisure Co. began operations as a new travel
subsidiary of Holdings to develop and grow the vacation package tour business of
the former America West Vacation division. With the commencement of Leisure Co.
operations, management believes that an improved understanding of AWA's results
can be gained by comparing the three and six months ended June 30, 1998 to pro
forma results for the same periods in 1997, which assumes Leisure Co. had
commenced operations as a subsidiary of Holdings on January 1, 1997. The
unaudited pro forma statements of income presented herein have been prepared
based upon certain pro forma adjustments to AWA's historical statements of
income for the three and six months ended June 30, 1997. The 1997 pro forma
results are for information purposes only and are not necessarily indicative of
what actually would have been achieved if Leisure Co. had functioned as a
separate entity during such period. In addition, the pro forma information is
not intended to be a projection of results that will be obtained in the future.

                           America West Airlines, Inc.
                              Statements of Income
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         Three Months Ended                 Six Months Ended
                                                               June 30,                          June 30,
                                                        1998             1997             1998             1997
                                                        ----             ----             ----             ----
                                                                      Pro Forma                         Pro Forma
<S>                                                  <C>              <C>              <C>              <C>
Operating revenues:
    Passenger ................................       $ 491,042        $ 450,753        $ 934,834        $ 886,293
    Cargo ....................................          11,887           12,054           24,492           24,810
    Other ....................................          16,560           14,949           31,116           28,840
                                                     ---------        ---------        ---------        ---------
       Total operating revenues ..............         519,489          477,756          990,442          939,943
                                                     ---------        ---------        ---------        ---------
Operating expenses:
    Salaries and related costs ...............         112,262          100,554          217,846          199,616
    Aircraft rental ..........................          60,195           55,089          118,940          110,021
    Rentals and landing fees .................          28,794           28,862           58,252           59,678
    Aircraft fuel ............................          47,798           57,608           98,082          126,724
    Agency commissions .......................          34,900           38,529           66,517           75,123
    Aircraft maintenance materials and repairs          44,041           37,669           86,469           68,981
    Depreciation and amortization ............          12,765           12,258           25,063           24,230
    Reorganization value amortization ........           4,974            5,923            9,948           11,845
    Other ....................................          99,968           94,064          187,710          186,006
                                                     ---------        ---------        ---------        ---------
       Total operating expenses ..............         445,697          430,556          868,827          862,224
                                                     ---------        ---------        ---------        ---------
Operating income .............................          73,792           47,200          121,615           77,719
                                                     ---------        ---------        ---------        ---------
Nonoperating income (expenses):
    Interest income ..........................           6,041            4,390           11,086            8,630
    Interest expense .........................          (8,263)         (12,059)         (17,935)         (24,140)
    Other, net ...............................            --               (168)            (264)             128
                                                     ---------        ---------        ---------        ---------
       Total nonoperating expenses, net ......          (2,222)          (7,837)          (7,113)         (15,382)
                                                     ---------        ---------        ---------        ---------
Income before income taxes ...................       $  71,570        $  39,363        $ 114,502        $  62,337
                                                     =========        =========        =========        =========
</TABLE>


                                       8
<PAGE>   9
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998

         The table below sets forth selected operating data for AWA.

<TABLE>
<CAPTION>
                                                    Three Months Ended    Percent           Six Months Ended     Percent
                                                          June 30,         Change                June 30          Change
                                                       1998      1997     1998-1997          1998       1997    1998-1997
                                                       ----      ----     ---------          ----       ----    ---------
<S>                                                 <C>       <C>         <C>             <C>        <C>        <C>
Aircraft (end of period).......................         104       100        4.0              104        100       4.0
Average daily aircraft utilization (hours).....        12.2      12.4       (1.6)            12.3       12.4      (0.8)
Available seat miles (in millions).............       6,082     5,848        4.0           11,928     11,638       2.5
Block hours....................................     115,050   113,089        1.7          228,252    225,812       1.1
Average stage length (miles)...................         819       770        6.4              811        769       5.5
Average passenger journey (miles)..............       1,227     1,145        7.2            1,170      1,117       4.7
Revenue passenger miles (in millions)..........       4,287     4,144        3.4            7,923      8,126      (2.5)
Load factor (percent)..........................        70.5      70.9       (0.4)  pts       66.4       69.8      (3.4) pts
Passenger enplanements (in thousands)..........       4,643     4,674       (0.7)           8,792      9,264      (5.1)
Yield per revenue passenger mile (cents).......       11.46     10.88        5.3            11.80      10.91       8.2
Revenue per available seat mile:
   Passenger (cents)...........................        8.07      7.71        4.7             7.84       7.62       2.9
   Total (cents)...............................        8.54      8.17        4.5             8.30       8.08       2.7
Fuel consumption (gallons in millions).........        97.1      93.4        4.0            190.2      185.5       2.5
Fuel price (cents per gallon)..................       49.23     61.70      (20.2)           51.56      68.32     (24.5)
Average number of full-time equivalent
   employees...................................       9,667     9,651        0.2            9,567      9,571         -
</TABLE>


         The table below sets forth the major components of operating cost per
available seat mile ("CASM") for AWA. CASM for 1997 is based on the 1997 pro
forma numbers for AWA.

<TABLE>
<CAPTION>
                                                     Three Months Ended   Percent         Six Months Ended    Percent
                                                          June 30,         Change              June 30         Change
                                                      1998       1997    1998-1997         1998      1997     1998-1997
                                                      ----       ----    ---------         ----      ----     ---------
<S>                                                   <C>     <C>        <C>               <C>    <C>         <C>
(in cents)                                                    Pro Forma                           Pro Forma
Salaries and related costs.....................       1.85       1.72        7.6           1.83      1.71        7.0
Aircraft rents.................................        .99        .94        5.3           1.00       .95        5.3
Other rents and landing fees...................        .47        .49       (4.1)           .49       .51       (3.9)
Aircraft fuel..................................        .79        .99      (20.2)           .82      1.09      (24.8)
Agency commissions.............................        .57        .66      (13.6)           .56       .65      (13.8)
Aircraft maintenance materials and repairs.....        .72        .64       12.5            .72       .59       22.0
Depreciation and amortization..................        .21        .21          -            .21       .21         -
Amortization of excess reorganization value....        .08        .10      (20.0)           .08       .10      (20.0)
Other..........................................       1.65       1.61        2.5           1.57      1.60       (1.9)
                                                      ----       ----                      ----      ----
                                                      7.33       7.36       (0.4)          7.28      7.41       (1.8)
                                                      ====       ====                      ====      ====
</TABLE>


                                       9
<PAGE>   10
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998

Three Months Ended June 30, 1998 and 1997

         For the three months ended June 30, 1998 and 1997, AWA realized
operating income of $73.8 million and $47.2 million, respectively. Income before
income taxes for the three month period in 1998 was $71.6 million compared to
$39.4 million in 1997.

         Total operating revenues for the 1998 second quarter were $519.5
million. Passenger revenues were $491.0 million for the three months ended June
30, 1998, an increase of $40.3 million or 8.9 percent from 1997. Passenger
revenue per available seat mile ("RASM") for the quarter increased 4.7 percent
to 8.07 cents from 7.71 cents driven by a 5.3 percent increase in passenger
yield. The increase in RASM and yield reflects the continued benefits of AWA's
improved product and revenue management capabilities. The increases occurred
despite a 6.4 percent increase in aircraft stage length due to increased flying
to long-haul business markets. Capacity, as measured by available seat miles
("ASMs"), increased 4.0 percent in the 1998 second quarter as compared to 1997
while load factor decreased by .4 points to 70.5 percent. Cargo and other
revenues increased 5.3 percent to $28.4 million for the second quarter of 1998.

         CASM decreased .4 percent to 7.33 cents in the second quarter of 1998
from 7.36 cents for the comparable 1997 period, primarily due to lower fuel
prices. Significant changes in the components of operating expense per ASM are
explained as follows:

         -        Salaries and related costs per ASM increased 7.6 percent
                  primarily due to increases in the accrual for AWArd Pay ($5.1
                  million) resulting from higher operating income in 1998 and
                  employee benefit related costs. AWArd Pay is the program by
                  which AWA awards performance bonuses to eligible
                  non-executive, non-union employees provided certain annually
                  established operating income and performance targets are
                  attained. In addition, a salary level increase in the pilot
                  contract that was effective May 1997 and increased training
                  drove pilot salaries per ASM higher in the 1998 quarter over
                  the comparable 1997 period.

         -        Aircraft rent expense per ASM increased 5.3 percent due to the
                  net addition of four leased aircraft to the fleet during the
                  1998 quarter as compared to 1997.

         -        Other rents and landing fees expense per ASM decreased 4.1
                  percent in the second quarter of 1998 as landings decreased by
                  2.9 percent.

         -        Aircraft fuel expense per ASM decreased 20.2 percent due to a
                  20.2 percent decrease in the average price per gallon of fuel
                  to 49.23 cents in the 1998 quarter from 61.70 cents in 1997.

         -        Agency commissions expense per ASM decreased 13.6 percent as
                  cost reductions associated with the change in agency
                  commission rate from 10 percent to eight percent in October 
                  1997 and the $50 commission cap implemented on May 1, 1998 
                  more than offset the effects of higher passenger revenues in 
                  the 1998 quarter.

         -        Aircraft maintenance materials and repairs expense per ASM
                  increased 12.5 percent primarily due to a $5.0 million
                  increase in capitalized maintenance amortization expense for
                  the second quarter of 1998 when compared to the 1997 second
                  quarter.

         -        Amortization of excess reorganization value expense per ASM
                  decreased 20.0 percent as a result of the reduction in the
                  unamortized balance of excess reorganization value due to the
                  utilization of tax attributes of the pre-reorganized Company.


                                       10
<PAGE>   11
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998

         -        Other operating expenses per ASM increased 2.5 percent to 1.65
                  cents from 1.61 cents primarily due to the effect in the 1998
                  quarter of the FAA settlement (see Note 6. "Subsequent Events
                  - FAA Settlement" in Notes to Condensed Financial Statements)
                  and Year 2000 costs and higher interrupted trip expense and
                  crew accommodation costs. These increases were offset in part
                  by reduced advertising costs.

         Net nonoperating expenses decreased $5.6 million to $2.2 million in the
three months ended June 30, 1998 from $7.8 million in 1997. Excluding $2.1
million of interest income and $2.0 million of interest expense associated with
inter-company notes, the year-over-year change was primarily due to a net
decrease in interest expense as AWA's average outstanding debt was $94.7 million
lower in the second quarter of 1998 as compared to 1997.

Six Months Ended June 30, 1998 and 1997

         For the six months ended June 30, 1998 and 1997, AWA realized operating
income of $121.6 million and $77.7 million, respectively. Income before income
taxes for the six month period in 1998 was $114.5 million compared to $62.3
million in 1997.

         Total operating revenues for the six months ended June 30, 1998 were
$990.4 million. Passenger revenues were $934.8 million for the six months ended
June 30, 1998, an increase of $48.5 million or 5.5 percent from 1997. RASM for
the six months ended June 30, 1998 increased 2.9 percent to 7.84 cents from 7.62
cents driven by an 8.2 percent increase in passenger yield. The increase in RASM
and yield occurred despite a 5.5 percent increase in aircraft stage length due
to increased flying to long-haul business markets and the lapse of a federal
transportation excise tax for the period January 1 to March 6, 1997. Capacity,
as measured by ASMs, increased 2.5 percent in the six months ended June 30, 1998
as compared to 1997 while load factor decreased by 3.4 points to 66.4 percent.
Cargo and other revenues increased 3.6 percent to $55.6 million for the six
months ended June 30, 1998.

         CASM decreased 1.8 percent to 7.28 cents in the six months ended June
30, 1998 from 7.41 cents for the comparable 1997 period, primarily due to lower
fuel prices. Significant changes in the components of operating expense per ASM
are explained as follows:

         -        Salaries and related costs per ASM increased 7.0 percent
                  primarily due to increases in the accrual for AWArd Pay ($6.3
                  million) resulting from higher operating income in 1998. In
                  addition, a salary level increase in the pilot contract that
                  was effective May 1997 and higher headcount increased pilot
                  salaries in the six month period ended June 30, 1998 compared
                  to 1997.

         -        Aircraft rent expense per ASM increased 5.3 percent due
                  primarily to the net addition of four leased aircraft to the
                  fleet during the six months ended June 30, 1998 as compared to
                  1997.

         -        Other rents and landing fees expense per ASM decreased 3.9
                  percent in the six months ended June 30, 1998 as landings
                  decreased by 3.4 percent. An increase in airport rents of $1.8
                  million was offset by lower equipment rentals as fewer spare
                  parts were on loan from other airlines.

         -        Aircraft fuel expense per ASM decreased 24.8 percent due to a
                  24.5 percent decrease in the average price per gallon of fuel
                  to 51.56 cents in the 1998 period from 68.32 cents in 1997.


                                       11
<PAGE>   12
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998

         -        Agency commissions expense per ASM decreased 13.8 percent as
                  the cost reduction associated with the change in agency
                  commission rate from 10 percent to eight percent in October 
                  1997 more than offset the effects of higher passenger revenues
                  in the six month period ended June 30, 1998. A $50 commission 
                  cap implemented on May 1, 1998 also contributed to the 
                  decrease.

         -        Aircraft maintenance materials and repairs expense per ASM
                  increased 22.0 percent primarily due to a $9.5 million
                  increase in capitalized maintenance amortization expense for
                  the six months ended June 30, 1998 when compared to the
                  comparable period in 1997 and higher airframe maintenance and 
                  component repair costs.

         -        Amortization of excess reorganization value expense per ASM
                  decreased 20.0 percent as a result of the reduction in the
                  unamortized balance of excess reorganization value due to the
                  utilization of tax attributes of the pre-reorganized Company.

         -        Other operating expenses per ASM decreased 1.9 percent to 1.57
                  cents from 1.60 cents primarily due to reduced advertising
                  costs and traffic liability insurance rates which were offset
                  in part by the effect in 1998 of the FAA settlement and Year
                  2000 costs, and higher crew accommodation expenses.

         Net nonoperating expenses decreased $8.3 million to $7.1 million in the
six months ended June 30, 1998 from $15.4 million in 1997. Excluding $4.2
million of interest income and $3.9 million of interest expense associated with
inter-company notes, the year-over-year change was primarily due to a net
decrease in interest expense as AWA's outstanding debt was $97.1 million lower
in the 1998 period as compared to 1997.

LIQUIDITY AND CAPITAL RESOURCES

         Unrestricted cash and cash equivalents and short-term investments
increased to $229.5 million at June 30, 1998 from $171.6 million at December 31,
1997. Net cash provided by operating activities increased to $187.2 million for
the six months ended June 30, 1998 from $88.8 million in 1997 due principally to
the period-over-period change in air traffic liability, which grew 22.4 percent
in the 1998 period as compared to a decrease of 13.7 percent in the 1997 period
and higher net income in 1998. Net cash used in investing activities increased
to $142.1 million for the six months ended June 30, 1998 period from $44.7
million for the 1997 period. This increase was primarily due to the purchase of
short-term investments totaling $64.4 million and the payment of $10.5 million
in equipment purchase deposits for aircraft. Net cash used in financing
activities was $51.7 million for the six months ended June 30, 1998 compared to
$35.0 million in the 1997 period primarily due to the repayment of $30 million
of revolving credit facility debt and the repurchase of AWA warrants.

         Operating with a working capital deficiency is common in the airline
industry as tickets sold for transportation which have not yet been provided are
classified as a current liability while the related income producing assets, the
aircraft, are classified as non-current. AWA's working capital deficiency at
June 30, 1998 was $116.7 million, a decrease of 27.7 percent from December 31,
1997.

         In April 1998, AWA completed the refunding of its $29.3 million
variable rate industrial development revenue bonds due 2016 ("old bonds") by
issuing $29.3 million of 6.3 percent fixed rate industrial development revenue
bonds due April 2023 ("new bonds"). Interest on the new bonds is payable
semiannually (April 1 and October 1) and commences on October 1, 1998. The new
bonds are subject to optional redemption prior to the maturity date on or after
April 1, 2008, in whole or in part, on any interest payment date at the
following redemption prices: 102 percent on April 1 or October 1, 2008; 101
percent on April 1 or October 1, 2009; and


                                       12
<PAGE>   13
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998


100 percent on April 1, 2010 and thereafter. As a result of the refinancing,
$29.9 million of cash, which secured the irrevocable direct pay letter of credit
that backed the old bonds, was released and became available for general
corporate purposes.

         At June 30, 1998, AWA had firm commitments to AVSA, to purchase a total
of 29 Airbus aircraft, with three to be delivered in the fourth quarter of 1998.
AWA also has an option to purchase 52 more Airbus aircraft of which 12 are
subject to reconfirmation by AWA. The aggregate net cost of firm commitments
remaining under the aircraft order is approximately $1.0 billion based on a 3.5
percent annual price escalation. AWA has arranged for financing from AVSA for
more than two-thirds of such commitment. AWA intends to seek additional
financing (which may include public debt financing or private financing) in the
future when and as appropriate. There can be no assurance that sufficient
funding will be obtained for all aircraft. A default by AWA under the AVSA
purchase commitment could have a material adverse effect on the Company.

         As of June 30, 1998, AWA's fleet consisted of 104 aircraft of which 17
aircraft meet the FAA's Stage II (but not Stage III) noise reduction
requirements and must be retired or significantly modified prior to the year
2000. In May 1998, AWA entered into an agreement to purchase 14 737 hush kits at
an aggregate net cost of approximately $14 million to comply with Stage III
requirements. Delivery of the hush kits began in May 1998 and will continue
through the first quarter of 1999. As of June 30, 1998, one aircraft had been
outfitted with a hush kit. The remaining four non-compliant aircraft will be
retired.

         Capital expenditures for the six months ended June 30, 1998 and 1997
were approximately $67.2 million and $76.5 million, respectively. Included in
these amounts are capital expenditures for capitalized maintenance of
approximately $55.3 million for the six months ended June 30, 1998 and $47.3
million for the six months ended June 30, 1997.

         Certain of AWA's long-term debt agreements contain minimum cash balance
requirements, leverage ratios, coverage ratios and other financial covenants
with which AWA was in compliance at June 30, 1998.

OTHER INFORMATION

YEAR 2000 COMPLIANCE

         Many currently installed computer systems and software products are
coded to accept two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. Any programs that have time-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in the computer shutting down or performing incorrect computations. As a result,
before December 31, 1999, computer systems and software used by many companies
may need to be upgraded to comply with such "Year 2000" requirements. Many of
the Company's systems, including information and computer systems and automated
equipment, will be affected by the Year 2000 issue. The Company is also heavily
reliant on the FAA's management of the nation's air traffic control system,
local authorities' management of the airports at which AWA operates, and vendors
to provide goods (fuel, catering, etc.), services (telecommunications, data
networks, satellites, etc.) and data (frequent flyer partnerships, alliances,
etc.).


                                       13
<PAGE>   14
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998

         The Company has underway a Year 2000 Project to identify the programs
and infrastructure that could be affected by the Year 2000 issues and is
implementing a plan to resolve the problems identified on a timely basis. The
plan will require the Company to devote a considerable amount of internal
resources and hire substantial external resources to assist with the
implementation and monitoring of the plan, and will require the replacement of
certain equipment and modification of certain software. The Company currently
estimates that the total cost of its Year 2000 Project will be approximately $29
million, including approximately $23 million which has been or will be expensed
as incurred and approximately $6 million of capital expenditures. These costs
include approximately $6 million of normal system software and equipment
upgrades and replacements which the Company anticipated incurring in the
ordinary course regardless of the Year 2000 issue. Substantially all of those
costs will be incurred during the second half of 1998 and during 1999.

   
         If the Company's plan to address the Year 2000 issue is not
successfully or timely implemented, the Company may need to devote more
resources to the process and additional costs may be incurred, which could have
a material adverse effect on the Company's financial condition and results of
operations. The Company is also in the process of discussing with the FAA,
airport authorities and its vendors the potential impact the Year 2000 issue
will have on their systems. Problems encountered by the FAA, the airport
authorities or vendors in connection with the Year 2000 issue also may have a
material adverse effect on the Company's financial condition and results of
operations. As a component of its Year 2000 Project, the Company is developing 
contingency plans to mitigate the effects of problems experienced by it or key 
vendors or service providers in the timely implementation of Year 2000 programs.
    

         The costs of the Company's Year 2000 Project and the date on which the
Company plans to complete the Year 2000 compliance program are based on
management's best estimates, and reflect assumptions regarding the availability
and cost of personnel trained in this area, the compliance plans of third
parties (including the FAA and other third parties mentioned above) and similar
uncertainties. However, due to the complexity and pervasiveness of the Year 2000
issue and in particular the uncertainty regarding the compliance programs of
third parties, no assurance can be given that these estimates will be achieved,
and actual results could differ materially from those anticipated.

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. Whether such forward-looking
statements and information ultimately prove to be accurate depends on various
uncertainties and future developments that cannot be predicted. The results of
operations in the air travel business historically fluctuate in response to
general economic conditions. The airline industry is sensitive to changes in
economic conditions that affect business and leisure travel and is highly
susceptible to unforeseen events, such as political instability, regional
hostilities, recession, fuel price escalation, inflation, adverse weather
conditions or other adverse occurrences that result in a decline in air travel.
Any event that results in decreased travel or increased competition among
airlines could have a material adverse effect on the Company's financial
condition and results of operations. The Company's results of operations for
interim periods are not necessarily indicative of those for an entire year,
because the travel business is subject to seasonal fluctuations. Due to the
greater demand for air travel during the summer months, revenues in the airline
travel industries 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 Company's business is subject to significant risks, including, the
competitive nature of the industry, the lack of significant unencumbered assets
and significant future capital requirements, the results of union negotiations,
the concentration of the voting power of the Company, the cost of aircraft fuel,
certain regulatory matters, operating and financial restrictions on the Company
imposed by certain loan and debt instruments and Year 2000 compliance issues.
For a more complete discussion of these and other risks and uncertainties that
may affect the Company's business and future operating results, please refer to
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
which is on file with the Securities and Exchange Commission.


                                       14
<PAGE>   15
                           AMERICA WEST AIRLINES, INC.
                                  JUNE 30, 1998



                                    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/ W. Douglas Parker
                                                  -----------------------------
                                                      W. Douglas Parker
                                                      Senior Vice President and
                                                        Chief Financial Officer

   
DATED:   August 10, 1998
    


                                       15