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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|þ |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|  |  | For the quarterly period ended March 31, 2003 or                                        
|  |  |                                                                                         
|o |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|  |  | For the transition period from              to                                          

|                       |  |        
|---------------------- |  | -------
|Commission file number |  | 1-12649

AMERICA WEST HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)


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

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

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

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

|                                                   |  |               
|-------------------------------------------------- |  | --------------
|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. Yesþ Noo

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

As of April 23, 2003, America West Holdings Corporation has 941,431 shares of
class A common stock and 32,771,285 shares of class B common stock outstanding.
As of April 23, 2003, America West Airlines, Inc. has 1,000 shares of class B
common stock outstanding, all of which are held by America West Holdings
Corporation.





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TABLE OF CONTENTS



|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | ITEM 1A. CONSOLIDATED FINANCIAL STATEMENTS  AMERICA WEST HOLDINGS CORPORATION               
|                               | ITEM 1B. FINANCIAL STATEMENTS  AMERICA WEST AIRLINES, INC.                                  
|                               | 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                     
|CERTIFICATIONS                
|EXHIBIT INDEX                 
|EX-99.1                       
|EX-99.2                       



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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)

|                        |                                                |                            |           |         |           |   |              |         |         |  | 
|----------------------- | ---------------------------------------------- | -------------------------- | --------- | ------- | --------- | - | ------------ | ------- | ------- |  | 
|                        |                                                |                            |           |         | March 31, |   | December 31,
|                        |                                                |                            |           |         | 2003      |   | 2002        
|                        |                                                |                            |           |         |           |   |             
|                        |                                                | (unaudited)                |           |         |           |  
|Assets                  |                                                |                            |           |         |           |  
|Current assets:         |                                                |                            |           |         |           |   |              |        
|                        | Cash and cash equivalents                      |                            | $         | 309,669 |           |   | $            | 335,750 |        
|                        | Short-term investments                         |                            |           |        |           |   |              | 24,738  |        
|                        | Accounts receivable, net                       |                            |           | 121,706 |           |   |              | 82,197  |        
|                        | Expendable spare parts and supplies, net       |                            |           | 60,159  |           |   |              | 55,894  |        
|                        | Prepaid expenses                               |                            |           | 163,783 |           |   |              | 110,337 |        
|                        |                                                |                            |           |         |           |   |              |        
|                        |                                                | Total current assets       |           |         | 655,317   |   |              |         | 608,916 | 
|                        |                                                |                            |           |         |           |   |              |        
|Property and equipment: |                                                |                            |           |         |           |   |              |        
|                        | Flight equipment                               |                            |           | 880,700 |           |   |              | 880,446 |        
|                        | Other property and equipment                   |                            |           | 274,104 |           |   |              | 274,329 |        
|                        | Equipment purchase deposits                    |                            |           | 46,050  |           |   |              | 46,050  |        
|                        |                                                |                            |           |         |           |   |              |        
|                        |                                                |                            | 1,200,854 |         |           |   | 1,200,825    |        
|                        | Less accumulated depreciation and amortization |                            |           | 566,258 |           |   |              | 551,065 |        
|                        |                                                |                            |           |         |           |   |              |        
|                        |                                                | Net property and equipment |           |         | 634,596   |   |              |         | 649,760 | 
|                        |                                                |                            |           |         |           |   |              |        
|Other assets:           |                                                |                            |           |         |           |   |              |        
|                        | Restricted cash                                |                            |           | 46,311  |           |   |              | 45,968  |        
|                        | Other assets, net                              |                            |           | 141,490 |           |   |              | 134,309 |        
|                        |                                                |                            |           |         |           |   |              |        
|                        |                                                | Total other assets         |           |         | 187,801   |   |              |         | 180,277 | 
|                        |                                                |                            |           |         |           |   |              |        
|                        |                                                | $                          | 1,477,714 |         |           | $ | 1,438,953    |        
|                        |                                                |                            |           |         |           |   |              |        

See accompanying notes to condensed consolidated financial statements.

2



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

|                                         |                                                                                                                                                  |                            |           |           |         |              |           |          |         | 
|---------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | --------- | ------- | ------------ | --------- | -------- | ------- | 
|                                         |                                                                                                                                                  |                            |           | March 31, |         | December 31,
|                                         |                                                                                                                                                  |                            |           | 2003      |         | 2002        
|                                         |                                                                                                                                                  |                            |           |           |         |             
|                                         |                                                                                                                                                  | (unaudited)                |           |           |         |             
|Liabilities and Stockholders' Equity     |                                                                                                                                                  |                            |           |           |         |             
|Current liabilities:                     |                                                                                                                                                  |                            |           |           |         |              |           |         
|                                         | Current maturities of long-term debt                                                                                                             |                            | $         | 60,795    |         |              | $         | 19,116   |        
|                                         | Current obligations under capital leases                                                                                                         |                            |           | 3,211     |         |              |           | 3,122    |        
|                                         | Accounts payable                                                                                                                                 |                            |           | 189,612   |         |              |           | 183,304  |        
|                                         | Air traffic liability                                                                                                                            |                            |           | 262,374   |         |              |           | 192,450  |        
|                                         | Accrued compensation and vacation benefits                                                                                                       |                            |           | 43,514    |         |              |           | 39,076   |        
|                                         | Accrued taxes                                                                                                                                    |                            |           | 43,842    |         |              |           | 35,159   |        
|                                         | Other accrued liabilities                                                                                                                        |                            |           | 41,860    |         |              |           | 38,607   |        
|                                         |                                                                                                                                                  |                            |           |           |         |              |           |         
|                                         |                                                                                                                                                  | Total current liabilities  |           |           | 645,208 |              |           |          | 510,834 | 
|                                         |                                                                                                                                                  |                            |           |           |         |              |           |         
|Long-term debt, less current maturities  |                                                                                                                                                  |                            | 654,954   |           |         |              | 700,983   |         
|Capital leases, less current obligations |                                                                                                                                                  |                            | 11,644    |           |         |              | 11,999    |         
|Deferred credits and other liabilities   |                                                                                                                                                  |                            | 147,070   |           |         |              | 146,959   |         
|Commitments and contingencies            |                                                                                                                                                  |                            |           |           |         |              |           |         
|Stockholders equity:                    |                                                                                                                                                  |                            |           |           |         |              |           |         
|                                         | Preferred stock, $.01 par value. Authorized 48,800,000
shares; no shares issued                                                                  |                            |           |          |         |              |           |         |        
|                                         | Class A common stock, $.01 par value. Authorized
1,200,000 shares; issued and outstanding 941,431 shares at
March 31, 2003 and December 31, 2002 |                            |           | 9         |         |              |           | 9        |        
|                                         | Class B common stock, $.01 par value. Authorized 100,000,000
shares; issued 49,055,180 shares at March 31, 2003 and
December 31, 2002            |                            |           | 491       |         |              |           | 491      |        
|                                         | Additional paid-in capital                                                                                                                       |                            |           | 628,868   |         |              |           | 628,868  |        
|                                         | Retained deficit                                                                                                                                 |                            |           | (319,032  | )       |              |           | (257,014 | )      
|                                         | Accumulated other comprehensive income                                                                                                           |                            |           | 14,708    |         |              |           | 2,030    |        
|                                         |                                                                                                                                                  |                            |           |           |         |              |           |         
|                                         |                                                                                                                                                  |                            | 325,044   |           |         |              | 374,384   |         
|                                         | Less: Cost of class B common stock in treasury, 16,283,895
shares at March 31, 2003 and December 31, 2002                                        |                            |           | (306,206  | )       |              |           | (306,206 | )      
|                                         |                                                                                                                                                  |                            |           |           |         |              |           |         
|                                         |                                                                                                                                                  | Total stockholders equity |           |           | 18,838  |              |           |          | 68,178  | 
|                                         |                                                                                                                                                  |                            |           |           |         |              |           |         
|                                         |                                                                                                                                                  | $                          | 1,477,714 |           |         | $            | 1,438,953 |         
|                                         |                                                                                                                                                  |                            |           |           |         |              |           |         

See accompanying notes to condensed consolidated financial statements.

3



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

|                                                                                       |                                                                 |                                  |         |                    |         |      |          |               |         |  
|-------------------------------------------------------------------------------------- | --------------------------------------------------------------- | -------------------------------- | ------- | ------------------ | ------- | ---- | -------- | ------------- | ------- | -
|                                                                                       |                                                                 |                                  |         | Three Months Ended
|                                                                                       |                                                                 |                                  |         | March 31,         
|                                                                                       |                                                                 |                                  |         | 2003               |         | 2002
|                                                                                       |                                                                 |                                  |         |                    |         |     
|                                                                                       |                                                                 |                                  |         |                    |         |      |          | (as restated)
|Operating revenues:                                                                    |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Passenger                                                       |                                  | $       | 500,574            |         |      | $        | 436,975       |        
|                                                                                       | Cargo                                                           |                                  |         | 7,056              |         |      |          | 7,320         |        
|                                                                                       | Other                                                           |                                  |         | 15,603             |         |      |          | 15,996        |        
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       |                                                                 | Total operating revenues         |         |                    | 523,233 |      |          |               | 460,291 |  
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Operating expenses:                                                                    |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Salaries and related costs                                      |                                  |         | 161,133            |         |      |          | 142,531       |        
|                                                                                       | Aircraft rents                                                  |                                  |         | 75,154             |         |      |          | 72,891        |        
|                                                                                       | Other rents and landing fees                                    |                                  |         | 39,760             |         |      |          | 41,430        |        
|                                                                                       | Aircraft fuel                                                   |                                  |         | 93,356             |         |      |          | 58,088        |        
|                                                                                       | Agency commissions                                              |                                  |         | 6,192              |         |      |          | 14,249        |        
|                                                                                       | Aircraft maintenance materials and repairs                      |                                  |         | 64,208             |         |      |          | 65,258        |        
|                                                                                       | Depreciation and amortization                                   |                                  |         | 17,474             |         |      |          | 16,658        |        
|                                                                                       | Special charges, net                                            |                                  |         | (102               | )       |      |          | 21,030        |        
|                                                                                       | Other                                                           |                                  |         | 112,198            |         |      |          | 111,622       |        
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       |                                                                 | Total operating expenses         |         |                    | 569,373 |      |          |               | 543,757 |  
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Operating loss                                                                         |                                                                 |                                  | (46,140 | )                  |         |      | (83,466  | )            
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Nonoperating income (expenses):                                                        |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Interest income                                                 |                                  |         | 1,407              |         |      |          | 2,789         |        
|                                                                                       | Interest expense, net                                           |                                  |         | (18,505            | )       |      |          | (17,173       | )      
|                                                                                       | Other, net                                                      |                                  |         | 1,220              |         |      |          | (2,458        | )      
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       |                                                                 | Total nonoperating expenses, net |         |                    | (15,878 | )    |          |               | (16,842 | )
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Loss before income tax benefit and cumulative effect of change
in accounting principle |                                                                 |                                  | (62,018 | )                  |         |      | (100,308 | )            
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Income tax benefit                                                                     |                                                                 |                                  |        |                    |         |      | (35,071  | )            
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Loss before cumulative effect of change in accounting principle                        |                                                                 |                                  | (62,018 | )                  |         |      | (65,237  | )            
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Cumulative effect of change in accounting principle                                    |                                                                 |                                  |        |                    |         |      | (208,223 | )            
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Net loss                                                                               |                                                                 | $                                | (62,018 | )                  |         | $    | (273,460 | )            
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Basic loss per share:                                                                  |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Loss before cumulative effect of change in accounting
principle |                                  | $       | (1.84              | )       |      | $        | (1.93         | )      
|                                                                                       | Cumulative effect of change in accounting principle             |                                  |         |                   |         |      |          | (6.17         | )      
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Basic loss per share                                            |                                  | $       | (1.84              | )       |      | $        | (8.10         | )      
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Diluted loss per share:                                                                |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Loss before cumulative effect of change in accounting
principle |                                  | $       | (1.84              | )       |      | $        | (1.93         | )      
|                                                                                       | Cumulative effect of change in accounting principle             |                                  |         |                   |         |      |          | (6.17         | )      
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Diluted loss per share                                          |                                  | $       | (1.84              | )       |      | $        | (8.10         | )      
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|Shares used for computation:                                                           |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Basic                                                           |                                  |         | 33,713             |         |      |          | 33,728        |        
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              
|                                                                                       | Diluted                                                         |                                  |         | 33,713             |         |      |          | 33,728        |        
|                                                                                       |                                                                 |                                  |         |                    |         |      |          |              

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)

|                                                                   |                                                              |                                                     |         |                    |        |      |          |               |         |  
|------------------------------------------------------------------ | ------------------------------------------------------------ | --------------------------------------------------- | ------- | ------------------ | ------ | ---- | -------- | ------------- | ------- | -
|                                                                   |                                                              |                                                     |         | Three Months Ended
|                                                                   |                                                              |                                                     |         | March 31,         
|                                                                   |                                                              |                                                     |         | 2003               |        | 2002
|                                                                   |                                                              |                                                     |         |                    |        |     
|                                                                   |                                                              |                                                     |         |                    |        |      |          | (as restated)
|Net cash used in operating activities                              |                                                              | $                                                   | (21,578 | )                  |        | $    | (106,669 | )            
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|Cash flows from investing activities:                              |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Purchases of property and equipment                          |                                                     |         | (46,907            | )      |      |          | (43,717       | )      
|                                                                   | Purchases of short-term investments                          |                                                     |         |                   |        |      |          | (5,277        | )      
|                                                                   | Sales of short-term investments                              |                                                     |         | 24,738             |        |      |          |              |        
|                                                                   | Proceeds from disposition of assets                          |                                                     |         | 23,457             |        |      |          | 21            |        
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   |                                                              | Net cash provided by (used in) investing activities |         |                    | 1,288  |      |          |               | (48,973 | )
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|Cash flows from financing activities:                              |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Repayment of debt                                            |                                                     |         | (5,791             | )      |      |          | (4,303        | )      
|                                                                   | Proceeds from issuance of debt                               |                                                     |         |                   |        |      |          | 430,500       |        
|                                                                   | Payment of debt issue costs                                  |                                                     |         |                   |        |      |          | (12,020       | )      
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   |                                                              | Net cash provided by (used in) financing activities |         |                    | (5,791 | )    |          |               | 414,177 |  
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|Net increase (decrease) in cash and cash equivalents               |                                                              |                                                     | (26,081 | )                  |        |      | 258,535  |              
|Cash and cash equivalents at beginning of period                   |                                                              |                                                     | 335,750 |                    |        |      | 156,865  |              
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|Cash and cash equivalents at end of period                         |                                                              | $                                                   | 309,669 |                    |        | $    | 415,400  |              
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|Cash, cash equivalents and short-term investments at end of period |                                                              | $                                                   | 309,669 |                    |        | $    | 420,677  |              
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|Cash paid (refunded) for:                                          |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Interest, net of amounts capitalized                         |                                                     | $       | 5,766              |        |      | $        | 6,652         |        
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Income taxes paid (refunded)                                 |                                                     | $       | 59                 |        |      | $        | (33,803       | )      
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|Non-cash investing and financing activities:                       |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Issuance of convertible notes, net of cancellations          |                                                     | $       |                   |        |      | $        | 104,465       |        
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Issuance of warrants                                         |                                                     | $       |                   |        |      | $        | 35,383        |        
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Equipment acquired through capital lease                     |                                                     | $       |                   |        |      | $        | 16,878        |        
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Notes payable canceled under the aircraft purchase agreement |                                                     | $       |                   |        |      | $        | 3,500         |        
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              
|                                                                   | Payment in kind notes issued, net of returns                 |                                                     | $       | 374                |        |      | $        |              |        
|                                                                   |                                                              |                                                     |         |                    |        |      |          |              

See accompanying notes to condensed consolidated financial statements.

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2003

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, 2002.

2. RESTATEMENT OF PREVIOUSLY REPORTED AMOUNTS

The Company has restated its financial statements for the fiscal year
ended December 31, 2001 and its unaudited financial statements for the first,
second and third quarters of fiscal year ended December 31, 2002. The changes
include:

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

Impairment Charges

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

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

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

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

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2003

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

Deferred Income Taxes

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

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

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

|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  
|-------------------------------------------------------------------------------------- |  | ----------------------------------------- | -------- | ----------- |  | -------- | ------ |  |  | - | -------- | -
|                                                                                       |  | For the Three Months Ended March 31, 2002
|                                                                                       |  |                                          
|                                                                                       |  | (in thousands except per share data)     
|                                                                                       |  | As Previously                             |          | Restatement |  | As      
|                                                                                       |  | Reported                                  |          | Adjustments |  | Restated
|                                                                                       |  |                                           |          |             |  |         
|Operating loss                                                                         |  | $                                         | (122,691 | )           |  |          | 39,225 |  |  | $ | (83,466  | )
|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  
|Loss before income tax benefit and cumulative
effect of change in accounting principle |  |                                           | (139,533 | )           |  |          | 39,225 |  |  |   | (100,308 | )
|Income tax benefit                                                                     |  |                                           | (53,512  | )           |  |          | 18,441 |  |  |   | (35,071  | )
|Loss before cumulative effect of change in
accounting principle                        |  |                                           | (86,021  | )           |  |          | 20,784 |  |  |   | (65,237  | )
|Cumulative effect of change in accounting
principle                                    |  |                                           | (272,284 | )           |  |          | 64,061 |  |  |   | (208,223 | )
|Net loss                                                                               |  | $                                         | (358,305 | )           |  |          | 84,845 |  |  | $ | (273,460 | )
|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  
|Basic and diluted loss per share:                                                      |  |                                           |          |             |  |          |        |  |  |   |          |  
|Loss before cumulative effect of change in
accounting principle                        |  | $                                         | (2.55    | )           |  |          | 0.62   |  |  | $ | (1.93    | )
|Cumulative effect of change in accounting
principle                                    |  |                                           | (8.07    | )           |  |          | 1.90   |  |  |   | (6.17    | )
|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  
|Net loss per share                                                                     |  | $                                         | (10.62   | )           |  |          | 2.52   |  |  | $ | (8.10    | )
|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  

3. STOCK OPTIONS

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

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2003

|                                                      |  |                                      |         |      |  |               |          |  
|----------------------------------------------------- |  | ------------------------------------ | ------- | ---- |  | ------------- | -------- | -
|                                                      |  | Three Months Ended                  
|                                                      |  | March 31,                           
|                                                      |  | 2003                                 |         | 2002
|                                                      |  |                                      |         |     
|                                                      |  |                                      |         |      |  | (as restated)
|                                                      |  | (in thousands except per share data)
|Net loss, as reported                                 |  | $                                    | (62,018 | )    |  | $             | (273,460 | )
|Stock-based compensation expense,
net of income taxes |  |                                      | (1,204  | )    |  |               | (1,311   | )
|                                                      |  |                                      |         |      |  |               |          |  
|Pro forma net loss                                    |  | $                                    | (63,222 | )    |  | $             | (274,771 | )
|                                                      |  |                                      |         |      |  |               |          |  
|Loss per share:                                       |  |                                      |         |      |  |               |          |  
|Basic  as reported                                   |  | $                                    | (1.84   | )    |  | $             | (8.10    | )
|                                                      |  |                                      |         |      |  |               |          |  
|Basic  pro forma                                     |  | $                                    | (1.88   | )    |  | $             | (8.15    | )
|                                                      |  |                                      |         |      |  |               |          |  
|Diluted  as reported                                 |  | $                                    | (1.84   | )    |  | $             | (8.10    | )
|                                                      |  |                                      |         |      |  |               |          |  
|Diluted  pro forma                                   |  | $                                    | (1.88   | )    |  | $             | (8.15    | )
|                                                      |  |                                      |         |      |  |               |          |  

Pro forma net loss reflects only options granted during the years 1995
through 2002. Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro forma net loss
amounts presented above because compensation cost is reflected over the
options vesting period and compensation cost for options granted prior to
January 1, 1995 is not considered.

4. COMPREHENSIVE LOSS

Comprehensive loss includes changes in the fair value of derivative
financial instruments that qualify for hedge accounting. For the three months
ended March 31, 2003 and 2002, the Company recorded a total comprehensive loss
of $49.3 million and $274.9 million, respectively. The difference between net
loss and comprehensive loss for the three months ended March 31, 2003 and 2002
is detailed in the following table:

|                   |                                                                                                                                          |   |                    |        |      |   |               |        |  
|------------------ | ---------------------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | ------ | ---- | - | ------------- | ------ | -
|                   |                                                                                                                                          |   | Three Months Ended
|                   |                                                                                                                                          |   | March 31,         
|                   |                                                                                                                                          |   | 2003               |        | 2002
|                   |                                                                                                                                          |   |                    |        |     
|                   |                                                                                                                                          |   |                    |        |      |   | (as restated)
|                   |                                                                                                                                          |   | (in thousands)    
|Net loss           |                                                                                                                                          | $ | (62,018            | )      |      | $ | (273,460      | )     
|                   |                                                                                                                                          |   |                    |        |      |   |               |       
|                   | Unrealized gains on derivative instruments                                                                                               |   |                    | 21,888 |      |   |               |       |  
|                   | Reclassification adjustment to net loss of previously
reported unrealized losses on derivative
instruments, net of taxes of $540 in 2002 |   |                    | (9,210 | )    |   |               | (1,390 | )
|                   |                                                                                                                                          |   |                    |        |      |   |               |       
|                   | Total other comprehensive income (loss)                                                                                                  |   |                    | 12,678 |      |   |               | (1,390 | )
|                   |                                                                                                                                          |   |                    |        |      |   |               |       
|Comprehensive loss |                                                                                                                                          | $ | (49,340            | )      |      | $ | (274,850      | )     
|                   |                                                                                                                                          |   |                    |        |      |   |               |       

5. SPECIAL CHARGES

In February 2003, AWA announced that it is eliminating hub operations in
Columbus, Ohio and, as a result, will be phasing 12 regional jets, all of which
are currently operated by Chautauqua Airlines under the America West Express
banner, out of the fleet. Between early April and mid-June of 2003, AWA will
gradually downsize the hub from 49 daily departures to 15 destinations to a
planned four mainline flights per day to Phoenix and Las Vegas. With the
downsizing of Columbus, AWA must eliminate service to New York City LaGuardia
Airport because perimeter rules at the airport prohibit flights beyond 1,500
miles. This precludes service from AWAs hubs in Phoenix and Las Vegas. In
the first quarter of 2003, the Company recorded a special charge of $1.0
million resulting from the elimination of its Columbus hub operations. The
charge is related to the costs to terminate certain contracts and employee
transfer and severance expenses. In the second and third quarters of 2003, the
Company expects to record additional special charges of approximately $8 to $10
million related to contract termination costs and the write-off of leasehold
improvements in Columbus.

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2003

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

In the first quarter of 2002, the Company recorded a special charge of
$21.1 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
|                                                                    |       |   |                
|                                                                    |       |   | (as restated)   |        | (as reported)
|                                                                    |       |   | (in thousands) 
|Impairment of owned aircraft and engines (based on appraised value) |       | $ |                |        |               | $ | 39,225 |       
|Fleet restructuring costs                                           |       |   | 9,915           |        |               |   | 9,915  |       
|Losses on sale-leaseback transactions                               |       |   | 6,328           |        |               |   | 6,328  |       
|Professional fees                                                   |       |   | 4,745           |        |               |   | 4,745  |       
|Write-off of computer system and security equipment                 |       |   | 3,411           |        |               |   | 3,411  |       
|Severance                                                           |       |   | 656             |        |               |   | 656    |       
|Revision of estimate for second quarter 2001 special charge         |       |   | (4,000          | )      |               |   | (4,000 | )     
|                                                                    |       |   |                 |        |               |   |        |       
|                                                                    | Total |   | $               | 21,055 |               |   | $      | 60,280 | 
|                                                                    |       |   |                 |        |               |   |        |       

Of this amount, approximately $10.3 million, principally related to losses
on sale-leaseback transactions, fleet restructuring costs, professional fees
and severance was accrued.

The following table presents the payments and other settlements made
during the first quarter of 2003 related to the special charge accruals.

|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  
|---------------------------- |  | -------------- | ----- | ------------- |  | ----------- | ------ | ---------- |  | ----- | --- |  |  | - | --- |  |  | - | ----- | -
|                             |  | Sale-          |       | Fleet         |  | Reductions- |        | Contract   |  |       |     | 
|                             |  | Leaseback      |       | Restructuring |  | in-force    |        | Term Costs |  | Total
|                             |  |                |       |               |  |             |        |            |  |      
|                             |  | (in thousands)
|Balance at December 31, 2002 |  | $              | 2,476 |               |  | $           | 3,357  |            |  | $     |    |  |  | $ |    |  |  | $ | 5,833 |  
|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  
|Special charges              |  |                |      |               |  |             | (1,072 | )          |  |       | 470 |  |  |   | 500 |  |  |   | (102  | )
|Payments                     |  |                |      |               |  |             | (271   | )          |  |       |    |  |  |   |    |  |  |   | (271  | )
|Loss
on sale-leasebacks      |  |                | (6    | )             |  |             |       |            |  |       |    |  |  |   |    |  |  |   | (6    | )
|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  
|Balance
at March 31, 2003    |  | $              | 2,470 |               |  | $           | 2,014  |            |  | $     | 470 |  |  | $ | 500 |  |  | $ | 5,454 |  
|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  

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

6.  NONOPERATING
INCOME (EXPENSE) - OTHER, NET

In March
2002, the Company wrote down an investment in an e-commerce entity, which was carried
at cost, to net realizable value recognizing a loss of $2.8 million.

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2003

7.   EARNINGS PER SHARE (EPS)

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

|                                                                |                                                        |   |                                 |            |      |   |               |            | 
|--------------------------------------------------------------- | ------------------------------------------------------ | - | ------------------------------- | ---------- | ---- | - | ------------- | ---------- | 
|                                                                |                                                        |   | Three Months Ended             
|                                                                |                                                        |   | March 31,                      
|                                                                |                                                        |   | 2003                            |            | 2002
|                                                                |                                                        |   |                                 |            |     
|                                                                |                                                        |   |                                 |            |      |   | (as restated)
|                                                                |                                                        |   | (in thousands of dollars except
|                                                                |                                                        |   | share data)                    
|BASIC LOSS PER SHARE                                            |                                                        |   |                                 |            |      |   |               |           
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (62,018                         | )          |      | $ | (65,237       | )         
|Cumulative effect of change in accounting principle             |                                                        |   |                                |            |      |   | (208,223      | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           
|Net loss                                                        |                                                        | $ | (62,018                         | )          |      | $ | (273,460      | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           
|Weighted average common shares outstanding                      |                                                        |   | 33,712,716                      |            |      |   | 33,727,882    |           
|Basic loss per share:                                           |                                                        |   |                                 |            |      |   |               |           
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (1.84                           | )          |      | $ | (1.93         | )         
|Cumulative effect of change in accounting principle             |                                                        |   |                                |            |      |   | (6.17         | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           
|Net loss                                                        |                                                        | $ | (1.84                           | )          |      | $ | (8.10         | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           
|DILUTED LOSS PER SHARE                                          |                                                        |   |                                 |            |      |   |               |           
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (62,018                         | )          |      | $ | (65,237       | )         
|Cumulative effect of change in accounting principle             |                                                        |   |                                |            |      |   | (208,223      | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           
|Net loss                                                        |                                                        | $ | (62,018                         | )          |      | $ | (273,460      | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           
|Share computation:                                              |                                                        |   |                                 |            |      |   |               |           
|                                                                | Weighted average common shares outstanding             |   |                                 | 33,712,716 |      |   |               | 33,727,882 | 
|                                                                | Assumed exercise of stock options and warrants         |   |                                 |           |      |   |               |           | 
|                                                                |                                                        |   |                                 |            |      |   |               |           
|                                                                | Weighted average common shares outstanding as adjusted |   |                                 | 33,712,716 |      |   |               | 33,727,882 | 
|                                                                |                                                        |   |                                 |            |      |   |               |           
|Diluted loss per share:                                         |                                                        |   |                                 |            |      |   |               |           
|Loss before cumulative effect of change in accounting principle |                                                        | $ | (1.84                           | )          |      | $ | (1.93         | )         
|Cumulative effect of change in accounting principle             |                                                        |   |                                |            |      |   | (6.17         | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           
|Net loss                                                        |                                                        | $ | (1.84                           | )          |      | $ | (8.10         | )         
|                                                                |                                                        |   |                                 |            |      |   |               |           

For the three months ended March 31, 2003, 7,768,466 stock options and
22,537,000 warrants issued in conjunction with the government guaranteed loan
are not included in the computation of diluted EPS because the option and
warrant exercise prices were greater than the average market price of common
stock for the period. In addition, 159 incremental shares from assumed
exercise of stock options are not included in the computation of diluted EPS
because of the antidilutive effect on EPS.

For the three months ended March 31, 2002, 73,638 incremental shares from
assumed exercise of stock options and 6,538,940 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 EPS. In addition, 5,365,055 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.

8. 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.

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AMERICA WEST HOLDINGS CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2003

9.   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FIN No. 46,
Consolidation of Variable
Interest Entities.FIN 46 requires that companies that control another entity
through interests other than voting interests should consolidate the controlled
entity. FIN 46 is effective for variable interest entities created after
January 31, 2003 and to any variable interest entities in which the Company
obtains an interest after that date. FIN 46 is effective for the quarter
ending September 30, 2003 for variable interest entities in which the Company
held a variable interest that it acquired before February 1, 2003. The Company
has evaluated the provisions of FIN 46 and does not believe it to be reasonably
possible that adoption would have a material effect on its financial condition
or results of operations.

10.   SUBSEQUENT EVENT

Aviation-Related Assistance

In April 2003, the Senate and House of Representatives of the
United
States of America passed, and the President signed, a supplemental
appropriations bill to provide certain aviation-related assistance. The bill
includes the following key provisions:



| |  |  | $2.3 billion of the appropriation is for grants to be made by the
Transportation Security Administration (TSA) to U.S. air carriers
based on the proportional share each carrier has paid or collected as of
the date of enactment of the legislation for passenger security and air
carrier security fees. These amounts will be distributed not later than
30 days after the date of enactment of the legislation.                      
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The TSA will not impose passenger security fees during the period
beginning June 1, 2003 and ending September 30, 2003.                                                                                                                                                                                                                                                                                                                     
|
| |  |  | $100 million of the appropriation will be available to compensate air
carriers for the direct costs associated with the strengthening of
flight deck doors and locks on aircraft.                                                                                                                                                                                                                                                           
|
| |  |  | Aviation war risk insurance provided by the federal government is
extended until August 2004.                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Certain airlines that receive the aviation-related assistance must
agree to limit the total cash compensation for certain executive
officers during the 12-month period beginning April 1, 2003 to an amount
equal to the annual salary paid to that officer during the air carriers
fiscal year 2002. Any violation of this agreement will require the
carrier to repay to the government the amount reimbursed for airline
security fees.

The Company estimates that the amount of reimbursement it
will receive
under the legislation will be approximately $80 million.

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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 March 31, 2003 and December 31, 2002, the condensed
statements of operations for the three months ended March 31, 2003 and 2002 and
the condensed statements of cash flows for the three months ended March 31,
2003 and 2002, together with the related notes, are set forth on the following
pages.

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

|                        |                                                |                            |           |         |             |   |              |         |         |  | 
|----------------------- | ---------------------------------------------- | -------------------------- | --------- | ------- | ----------- | - | ------------ | ------- | ------- |  | 
|                        |                                                |                            |           |         | March 31,   |   | December 31,
|                        |                                                |                            |           |         | 2003        |   | 2002        
|                        |                                                |                            |           |         |             |   |             
|                        |                                                |                            |           |         | (unaudited) |   |              |         |        
|                        |                                                |                            | Assets    |         |             |   |              |         |         |  | 
|Current assets:         |                                                |                            |           |         |             |   |              |        
|                        | Cash and cash
equivalents                      |                            | $         | 300,586 |             |   | $            | 326,612 |        
|                        | Short-term
investments                         |                            |           |        |             |   |              | 24,738  |        
|                        | Accounts receivable,
net                       |                            |           | 106,740 |             |   |              | 72,667  |        
|                        | Expendable spare parts and supplies,
net       |                            |           | 60,159  |             |   |              | 55,894  |        
|                        | Prepaid expenses                               |                            |           | 160,171 |             |   |              | 107,587 |        
|                        |                                                |                            |           |         |             |   |              |        
|                        |                                                | Total current assets       |           |         | 627,656     |   |              |         | 587,498 | 
|                        |                                                |                            |           |         |             |   |              |        
|Property and
equipment: |                                                |                            |           |         |             |   |              |        
|                        | Flight equipment                               |                            |           | 880,700 |             |   |              | 880,446 |        
|                        | Other property and
equipment                   |                            |           | 265,943 |             |   |              | 266,060 |        
|                        | Equipment purchase
deposits                    |                            |           | 46,050  |             |   |              | 46,050  |        
|                        |                                                |                            |           |         |             |   |              |        
|                        |                                                |                            | 1,192,693 |         |             |   | 1,192,556    |        
|                        | Less accumulated depreciation and
amortization |                            |           | 559,935 |             |   |              | 544,821 |        
|                        |                                                |                            |           |         |             |   |              |        
|                        |                                                | Net property and
equipment |           |         | 632,758     |   |              |         | 647,735 | 
|                        |                                                |                            |           |         |             |   |              |        
|Other assets:           |                                                |                            |           |         |             |   |              |        
|                        | Restricted cash                                |                            |           | 46,311  |             |   |              | 45,968  |        
|                        | Advances to parent company,
net                |                            |           | 223,695 |             |   |              | 223,695 |        
|                        | Other assets, net                              |                            |           | 147,775 |             |   |              | 140,119 |        
|                        |                                                |                            |           |         |             |   |              |        
|                        |                                                | Total other assets         |           |         | 417,781     |   |              |         | 409,782 | 
|                        |                                                |                            |           |         |             |   |              |        
|                        |                                                | $                          | 1,678,195 |         |             | $ | 1,645,015    |        
|                        |                                                |                            |           |         |             |   |              |         |        

See accompanying notes to condensed financial statements.

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

|                                        |                                                                               |                            |                                      |          |             |   |              |          |         |  | 
|--------------------------------------- | ----------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | -------- | ----------- | - | ------------ | -------- | ------- |  | 
|                                        |                                                                               |                            |                                      |          | March 31,   |   | December 31,
|                                        |                                                                               |                            |                                      |          | 2003        |   | 2002        
|                                        |                                                                               |                            |                                      |          |             |   |             
|                                        |                                                                               |                            |                                      |          | (unaudited) |   |              |          |        
|                                        |                                                                               |                            | Liabilities and Stockholders
Equity |          |             |   |              |          |         |  | 
|Current liabilities:                    |                                                                               |                            |                                      |          |             |   |              |         
|                                        | Current maturities of long-term
debt                                          |                            | $                                    | 60,795   |             |   | $            | 19,116   |        
|                                        | Current obligations of capital
leases                                         |                            |                                      | 3,211    |             |   |              | 3,122    |        
|                                        | Accounts payable                                                              |                            |                                      | 181,358  |             |   |              | 176,903  |        
|                                        | Payable to affiliate,
net                                                     |                            |                                      | 27,271   |             |   |              | 12,175   |        
|                                        | Air traffic liability                                                         |                            |                                      | 221,995  |             |   |              | 170,091  |        
|                                        | Accrued compensation and vacation
benefits                                    |                            |                                      | 43,357   |             |   |              | 39,007   |        
|                                        | Accrued taxes                                                                 |                            |                                      | 37,492   |             |   |              | 28,809   |        
|                                        | Other accrued
liabilities                                                     |                            |                                      | 41,680   |             |   |              | 38,450   |        
|                                        |                                                                               |                            |                                      |          |             |   |              |         
|                                        |                                                                               | Total current
liabilities  |                                      |          | 617,159     |   |              |          | 487,673 | 
|                                        |                                                                               |                            |                                      |          |             |   |              |         
|Long-term debt, less current
maturities |                                                                               |                            | 654,954                              |          |             |   | 700,983      |         
|Capital leases, less current
maturities |                                                                               |                            | 11,644                               |          |             |   | 11,999       |         
|Deferred credits and other
liabilities  |                                                                               |                            | 145,256                              |          |             |   | 145,145      |         
|Commitments and
contingencies           |                                                                               |                            |                                      |          |             |   |              |         
|Stockholders
equity:                   |                                                                               |                            |                                      |          |             |   |              |         
|                                        | Common Stock $.01 par value. Authorized,
issued and
outstanding; 1,000 shares |                            |                                      |         |             |   |              |         |        
|                                        | Additional paid-in
capital                                                    |                            |                                      | 555,132  |             |   |              | 555,132  |        
|                                        | Retained deficit                                                              |                            |                                      | (320,658 | )           |   |              | (257,947 | )      
|                                        | Accumulated other comprehensive
income                                        |                            |                                      | 14,708   |             |   |              | 2,030    |        
|                                        |                                                                               |                            |                                      |          |             |   |              |         
|                                        |                                                                               | Total stockholders
equity |                                      |          | 249,182     |   |              |          | 299,215 | 
|                                        |                                                                               |                            |                                      |          |             |   |              |         
|                                        |                                                                               | $                          | 1,678,195                            |          |             | $ | 1,645,015    |         
|                                        |                                                                               |                            |                                      |          |             |   |              |         

See accompanying notes to condensed financial statements.

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

|                                                                                       |                                            |                                  |         |                    |         |      |          |               |         |  
|-------------------------------------------------------------------------------------- | ------------------------------------------ | -------------------------------- | ------- | ------------------ | ------- | ---- | -------- | ------------- | ------- | -
|                                                                                       |                                            |                                  |         | Three Months Ended
|                                                                                       |                                            |                                  |         | March 31,         
|                                                                                       |                                            |                                  |         | 2003               |         | 2002
|                                                                                       |                                            |                                  |         |                    |         |     
|                                                                                       |                                            |                                  |         |                    |         |      |          | (as restated)
|Operating revenues:                                                                    |                                            |                                  |         |                    |         |      |          |              
|                                                                                       | Passenger                                  |                                  | $       | 500,574            |         |      | $        | 436,975       |        
|                                                                                       | Cargo                                      |                                  |         | 7,056              |         |      |          | 7,320         |        
|                                                                                       | Other                                      |                                  |         | 6,775              |         |      |          | 9,304         |        
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|                                                                                       |                                            | Total operating revenues         |         |                    | 514,405 |      |          |               | 453,599 |  
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Operating expenses:                                                                    |                                            |                                  |         |                    |         |      |          |              
|                                                                                       | Salaries and related
costs                 |                                  |         | 160,496            |         |      |          | 142,079       |        
|                                                                                       | Aircraft rents                             |                                  |         | 75,154             |         |      |          | 72,891        |        
|                                                                                       | Other rents and landing
fees               |                                  |         | 39,760             |         |      |          | 41,430        |        
|                                                                                       | Aircraft fuel                              |                                  |         | 93,356             |         |      |          | 58,088        |        
|                                                                                       | Agency
commissions                         |                                  |         | 6,192              |         |      |          | 14,249        |        
|                                                                                       | Aircraft maintenance materials and
repairs |                                  |         | 64,208             |         |      |          | 65,258        |        
|                                                                                       | Depreciation and
amortization              |                                  |         | 17,474             |         |      |          | 16,658        |        
|                                                                                       | Special charges, net                       |                                  |         | (102               | )       |      |          | 21,030        |        
|                                                                                       | Other                                      |                                  |         | 104,614            |         |      |          | 104,244       |        
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|                                                                                       |                                            | Total operating expenses         |         |                    | 561,152 |      |          |               | 535,927 |  
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Operating loss                                                                         |                                            |                                  | (46,747 | )                  |         |      | (82,328  | )            
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Nonoperating income
(expenses):                                                        |                                            |                                  |         |                    |         |      |          |              
|                                                                                       | Interest income                            |                                  |         | 3,057              |         |      |          | 4,498         |        
|                                                                                       | Interest expense, net                      |                                  |         | (20,241            | )       |      |          | (18,897       | )      
|                                                                                       | Other, net                                 |                                  |         | 1,220              |         |      |          | (2,458        | )      
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|                                                                                       |                                            | Total nonoperating expenses, net |         |                    | (15,964 | )    |          |               | (16,857 | )
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Loss before income tax benefit and
cumulative effect
of change in accounting principle |                                            |                                  | (62,711 | )                  |         |      | (99,185  | )            
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Income tax benefit                                                                     |                                            |                                  |        |                    |         |      | (30,484  | )            
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Loss before cumulative effect of change in
accounting principle                        |                                            |                                  | (62,711 | )                  |         |      | (68,701  | )            
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Cumulative effect of change in accounting
principle                                    |                                            |                                  |        |                    |         |      | (187,949 | )            
|                                                                                       |                                            |                                  |         |                    |         |      |          |              
|Net loss                                                                               |                                            | $                                | (62,711 | )                  |         | $    | (256,650 | )            
|                                                                                       |                                            |                                  |         |                    |         |      |          |               |        

See accompanying notes to condensed financial statements.

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

|                                                                    |                                                              |   |                                                     |         |                    |        |          |         |               |         |  
|------------------------------------------------------------------- | ------------------------------------------------------------ | - | --------------------------------------------------- | ------- | ------------------ | ------ | -------- | ------- | ------------- | ------- | -
|                                                                    |                                                              |   |                                                     |         | Three Months Ended
|                                                                    |                                                              |   |                                                     |         | March 31,         
|                                                                    |                                                              |   |                                                     |         | 2003               |        | 2002    
|                                                                    |                                                              |   |                                                     |         |                    |        |         
|                                                                    |                                                              |   |                                                     |         |                    |        |          |         | (as restated)
|Net cash used in operating
activities                               |                                                              | $ | (21,526                                             | )       |                    | $      | (101,289 | )      
|Cash flows from investing
activities:                               |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Purchases of property and
equipment                          |   |                                                     | (46,904 | )                  |        |          | (43,502 | )            
|                                                                    | Purchases of short-term
investments                          |   |                                                     |        |                    |        |          | (5,277  | )            
|                                                                    | Sales of short-term
investments                              |   |                                                     | 24,738  |                    |        |          |        |              
|                                                                    | Proceeds from disposition of
assets                          |   |                                                     | 23,457  |                    |        |          | 21      |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    |                                                              |   | Net cash provided by (used in) investing
activities |         |                    | 1,291  |          |         |               | (48,758 | )
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|Cash flows from financing
activities:                               |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Repayment of debt                                            |   |                                                     | (5,791  | )                  |        |          | (4,303  | )            
|                                                                    | Proceeds from issuance of
debt                               |   |                                                     |        |                    |        |          | 430,500 |              
|                                                                    | Payment of debt issue
costs                                  |   |                                                     |        |                    |        |          | (12,020 | )            
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    |                                                              |   | Net cash provided by (used in) financing
activities |         |                    | (5,791 | )        |         |               | 414,177 |  
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|Net increase (decrease) in cash and
cash equivalents                |                                                              |   | (26,026                                             | )       |                    |        | 264,130  |        
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|Cash and cash equivalents at beginning of
period                    |                                                              |   | 326,612                                             |         |                    |        | 148,520  |        
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|Cash and cash equivalents at end of
period                          |                                                              | $ | 300,586                                             |         |                    | $      | 412,650  |        
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|Cash, cash equivalents, and short-term
investments at end of period |                                                              | $ | 300,586                                             |         |                    | $      | 417,927  |        
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|Cash paid
(refunded) for:                                           |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Interest, net of amounts
capitalized                         |   | $                                                   | 5,766   |                    |        | $        | 6,652   |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Income taxes paid
(refunded)                                 |   | $                                                   | 26      |                    |        | $        | (33,833 | )            
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|Non-cash investing and financing
activities:                        |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Reclassification of advances to parent
company, net          |   | $                                                   |        |                    |        | $        | 257,771 |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Issuance of convertible
notes                                |   | $                                                   |        |                    |        | $        | 104,465 |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Issuance of warrants                                         |   | $                                                   |        |                    |        | $        | 35,383  |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Equipment acquired through capital
lease                     |   | $                                                   |        |                    |        | $        | 16,878  |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Notes payable canceled under the aircraft
purchase agreement |   | $                                                   |        |                    |        | $        | 3,500   |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        
|                                                                    | Payment in kind notes issued, net of
returns                 |   | $                                                   | 374     |                    |        | $        |        |              
|                                                                    |                                                              |   |                                                     |         |                    |        |          |        

See accompanying notes to condensed financial statements.

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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
March 31, 2003

1.   BASIS OF PRESENTATION

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

2.   RESTATEMENT OF PREVIOUSLY REPORTED AMOUNTS

AWA has restated its financial statements for the fiscal year
ended
December 31, 2001 and its unaudited financial statements for the first, second
and third quarters of fiscal year ended December 31, 2002. The changes
include:



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

Impairment Charges

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

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

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

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

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

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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
March 31, 2003

Deferred Income Taxes

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

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

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

|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  
|-------------------------------------------------------------------------------------- |  | ----------------------------------------- | -------- | ----------- |  | -------- | ------ |  |  | - | -------- | -
|                                                                                       |  | For the Three Months Ended March 31,
2002
|                                                                                       |  |                                          
|                                                                                       |  | (in thousands except per share data)     
|                                                                                       |  | As Previously                             |          | Restatement |  | As      
|                                                                                       |  | Reported                                  |          | Adjustments |  | Restated
|                                                                                       |  |                                           |          |             |  |         
|Operating loss                                                                         |  | $                                         | (121,553 | )           |  |          | 39,225 |  |  | $ | (82,328  | )
|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  
|Loss before income tax benefit and cumulative
effect of change in accounting principle |  |                                           | (138,410 | )           |  |          | 39,225 |  |  |   | (99,185  | )
|Income tax benefit                                                                     |  |                                           | (53,078  | )           |  |          | 22,594 |  |  |   | (30,484  | )
|Loss before cumulative effect of change in
accounting principle                        |  |                                           | (85,332  | )           |  |          | 16,631 |  |  |   | (68,701  | )
|Cumulative effect of change in accounting
principle                                    |  |                                           | (252,010 | )           |  |          | 64,061 |  |  |   | (187,949 | )
|Net loss                                                                               |  | $                                         | (337,342 | )           |  |          | 80,692 |  |  | $ | (256,650 | )
|                                                                                       |  |                                           |          |             |  |          |        |  |  |   |          |  

3   ADVANCES TO PARENT COMPANY AND AFFILIATE

As of March 31, 2003, AWA had net advances to
Holdings of $223.7 million,
which were classified in Other Assetson AWAs condensed balance sheet due to
certain restrictions related to the timing of repayment under the $429 million
government guaranteed loan and the $73.2 million term loan. In addition, AWA
had a net payable of $27.2 million due principally to TLC, a wholly owned
subsidiary of Holdings. This payable, which is primarily related to credit
card receipts collected by AWA for vacation packages sold by TLC, was
classified in AWAs condensed balance sheet as a current liability.

4.   STOCK OPTIONS

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

|                                                      |  |                             |         |      |  |   |          |  
|----------------------------------------------------- |  | --------------------------- | ------- | ---- |  | - | -------- | -
|                                                      |  | Three
Months EndedMarch 31,
|                                                      |  | 2003                        |         | 2002
|                                                      |  |                             |         |     
|                                                      |  | (in
thousands)             
|Net
loss, as reported                                 |  | $                           | (62,711 | )    |  | $ | (256,650 | )
|                                                     
|Stock-based
compensation expense, net of income taxes |  |                             | (1,186  | )    |  |   | (1,229   | )
|                                                      |  |                             |         |     
|Pro
forma net loss                                    |  | $                           | (63,897 | )    |  | $ | (257,879 | )

Pro
forma net loss reflects only options granted during the years 1995
through 2002. Therefore, the full impact of calculating compensation
cost for stock options under SFAS No. 123 is not reflected in
the pro forma net loss amounts presented above because compensation
cost is reflected over the options vesting period and
compensation cost for options granted prior to January 1, 1995
is not considered.

5.   COMPREHENSIVE LOSS

Comprehensive loss includes changes in the fair value of
derivative
financial instruments that qualify for hedge accounting. For the three months
ended March 31, 2003 and 2002, AWA recorded a total comprehensive loss of $50.0
million and $258.0 million, respectively. The difference between net loss and
comprehensive loss for the three months ended March 31, 2003 and 2002 is
detailed in the following table:

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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
March 31, 2003

|                   |                                                                                                                                          |   |                              |        |      |   |               |        |  
|------------------ | ---------------------------------------------------------------------------------------------------------------------------------------- | - | ---------------------------- | ------ | ---- | - | ------------- | ------ | -
|                   |                                                                                                                                          |   | Three Months Ended March 31,
|                   |                                                                                                                                          |   | 2003                         |        | 2002
|                   |                                                                                                                                          |   |                              |        |     
|                   |                                                                                                                                          |   |                              |        |      |   | (as restated)
|                   |                                                                                                                                          |   | (in thousands)              
|Net loss           |                                                                                                                                          | $ | (62,711                      | )      |      | $ | (256,650      | )     
|                   |                                                                                                                                          |   |                              |        |      |   |               |       
|                   | Unrealized gains on derivative
instruments                                                                                               |   |                              | 21,888 |      |   |               |       |  
|                   | Reclassification adjustment to net loss of
previously
reported unrealized losses on derivative
instruments, net of taxes of $540 in 2002 |   |                              | (9,210 | )    |   |               | (1,390 | )
|                   |                                                                                                                                          |   |                              |        |      |   |               |       
|                   | Total other comprehensive income
(loss)                                                                                                  |   |                              | 12,678 |      |   |               | (1,390 | )
|                   |                                                                                                                                          |   |                              |        |      |   |               |       
|Comprehensive loss |                                                                                                                                          | $ | (50,033                      | )      |      | $ | (258,040      | )     
|                   |                                                                                                                                          |   |                              |        |      |   |               |       

6.   SPECIAL CHARGES

In February 2003, AWA announced that it is eliminating hub
operations in
Columbus, Ohio and, as a result, will be phasing 12 regional jets, all of which
are currently operated by Chautauqua Airlines under the America West Express
banner, out of the fleet. Between early April and mid-June of 2003, AWA will
gradually downsize the hub from 49 daily departures to 15 destinations to a
planned four mainline flights per day to Phoenix and Las Vegas. With the
downsizing of Columbus, AWA must eliminate service to New York City LaGuardia
Airport because perimeter rules at the airport prohibit flights beyond 1,500
miles. This precludes service from AWAs hubs in Phoenix and Las Vegas. In
the first quarter of 2003, AWA recorded a special charge of $1.0 million
resulting from the elimination of its Columbus hub operations. The charge is
related to the costs to terminate certain contracts and employee transfer and
severance expenses. In the second and third quarters of 2003, AWA expects to
record additional special charges of approximately $8 to $10 million related to
contract termination costs and the write-off of leasehold improvements in
Columbus.

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

In the first quarter of 2002, AWA recorded a special charge of
$21.0
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
|                                                                    |       |   |                
|                                                                    |       |   | (as restated)   |        | (as reported)
|                                                                    |       |   | (in thousands) 
|Impairment of owned aircraft and engines
(based on appraised value) |       | $ |                |        |               | $ | 39,225 |       
|Fleet restructuring
costs                                           |       |   | 9,915           |        |               |   | 9,915  |       
|Losses on sale-leaseback
transactions                               |       |   | 6,328           |        |               |   | 6,328  |       
|Professional fees                                                   |       |   | 4,745           |        |               |   | 4,745  |       
|Write-off of computer system and security
equipment                 |       |   | 3,411           |        |               |   | 3,411  |       
|Severance                                                           |       |   | 631             |        |               |   | 631    |       
|Revision of estimate for second quarter
2001 special charge         |       |   | (4,000          | )      |               |   | (4,000 | )     
|                                                                    |       |   |                 |        |               |   |        |       
|                                                                    | Total |   | $               | 21,030 |               |   | $      | 60,255 | 
|                                                                    |       |   |                 |        |               |   |        |       

Of this amount, approximately $10.3 million, principally
related to losses
on sale-leaseback transactions, fleet restructuring costs, professional fees
and severance was accrued.

18



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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
March 31, 2003

The following table presents the payments and other
settlements made
during the first quarter of 2003 related to the special charge accruals.

|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  
|---------------------------- |  | -------------- | ----- | ------------- |  | ----------- | ------ | ---------- |  | ----- | --- |  |  | - | --- |  |  | - | ----- | -
|                             |  | Sale-          |       | Fleet         |  | Reductions- |        | Contract   |  |       |     | 
|                             |  | Leaseback      |       | Restructuring |  | in-force    |        | Term Costs |  | Total
|                             |  |                |       |               |  |             |        |            |  |      
|                             |  | (in thousands)
|Balance at December 31,
2002 |  | $              | 2,476 |               |  | $           | 3,357  |            |  | $     |    |  |  | $ |    |  |  | $ | 5,833 |  
|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  
|Special charges              |  |                |      |               |  |             | (1,072 | )          |  |       | 470 |  |  |   | 500 |  |  |   | (102  | )
|Payments                     |  |                |      |               |  |             | (271   | )          |  |       |    |  |  |   |    |  |  |   | (271  | )
|Loss on sale-leasebacks      |  |                | (6    | )             |  |             |       |            |  |       |    |  |  |   |    |  |  |   | (6    | )
|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  
|Balance at March 31, 2003    |  | $              | 2,470 |               |  | $           | 2,014  |            |  | $     | 470 |  |  | $ | 500 |  |  | $ | 5,454 |  
|                             |  |                |       |               |  |             |        |            |  |       |     |  |  |   |     |  |  |   |       |  

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

7.   NONOPERATING INCOME
(EXPENSE) - OTHER, NET

In March 2002, AWA wrote down an investment in an
e-commerce entity, which
was carried at cost, to net realizable value recognizing a loss of $2.8
million.

8.   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.

9.   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FIN No. 46,
Consolidation of Variable
Interest Entities.FIN 46 requires that companies that control another entity
through interests other than voting interests should consolidate the controlled
entity. FIN 46 is effective for variable interest entities created after
January 31, 2003 and to any variable interest entities in which the Company
obtains an interest after that date. FIN 46 is effective for the quarter
ending September 30, 2003 for variable interest entities in which the Company
held a variable interest that it acquired before February 1, 2003. The Company
has evaluated the provisions of FIN 46 and does not believe it to be reasonably
possible that adoption would have a material effect on its financial condition
or results of operations.

10.   SUBSEQUENT EVENT

Aviation-Related Assistance

In April 2003, the Senate and House of Representatives of the
United
States of America passed, and the President signed, a supplemental
appropriations bill to provide certain aviation-related assistance. The bill
includes the following key provisions:



| |  |  | $2.3 billion of the appropriation is for grants to be made by the
Transportation Security Administration (TSA) to U.S. air carriers
based on the proportional share each carrier has paid or collected as of
the date of enactment of the legislation for passenger security and air
carrier security fees. These amounts will be distributed not later than
30 days after the date of enactment of the legislation.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The TSA will not impose passenger security fees during the period
beginning June 1, 2003 and ending September 30, 2003.                                                                                                                                                                                                                                                                                               
|
| |  |  | $100 million of the appropriation will be available to compensate air
carriers for the direct costs associated with the strengthening of
flight deck doors and locks on aircraft.                                                                                                                                                                                                                                     
|
| |  |  | Aviation war risk insurance provided by the federal government is
extended until August 2004.                                                                                                                                                                                                                                                                                                                         

19



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AMERICA WEST AIRLINES, INC.
Notes to Condensed Financial Statements
March 31, 2003



| |  |  | Certain airlines that receive the aviation-related assistance must
agree to limit the total cash compensation for certain executive
officers during the 12-month period beginning April 1, 2003 to an amount
equal to the annual salary paid to that officer during the air carriers
fiscal year 2002. Any violation of this agreement will require the
carrier to repay to the government the amount reimbursed for airline
security fees.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company estimates
that the amount of reimbursement it will receive
under the legislation will be approximately $80 million.

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##### Table of Contents



AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

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




Holdings is the parent company of AWA and TLC. AWA is the
eighth largest
commercial airline carrier in the United States operating through its principal
hubs located in Phoenix, Arizona and Las Vegas, Nevada. As of March 31, 2003,
AWA served 64 destinations in North America, including seven destinations in
Mexico and three in Canada. TLC arranges and sells vacation packages primarily
to Las Vegas that may include airfare, hotel accommodations and ground
transportation. Holdings primary business activity is ownership of all the
capital stock of AWA and TLC.

Restatement Of Previously Reported Amounts

Holdings and AWA have restated their financial statements for
the fiscal
year ended December 31, 2001 and their unaudited financial statements for the
first, second and third quarters of fiscal year ended December 31, 2002. The
changes include:



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

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

Impairment Charges

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

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

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

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

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

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

Deferred Income Taxes

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

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

Overview

During the first quarter of 2003, in addition to the continued
impact of
the September 11, 2001 terrorist attacks and the soft economic conditions, the
airline industry and AWA were negatively impacted by the war against Iraq.
Passenger revenues continue to be 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,
aviation-related insurance and higher jet fuel prices.

In response to these difficult industry conditions, we took the
following
cost saving measures as part of our continued focus on maintaining our low cost
structure.



| |  |  | In February 2003, we announced that we are eliminating hub operations
in Columbus, Ohio and, as a result, will be phasing 12 regional jets,
all of which are currently operated by Chautauqua Airlines under the
America West Express banner, out of the fleet. See Note 5, Special
Chargesin Notes to Condensed Consolidated Financial Statements. Due
to excess capacity relative to demand in the markets served by Columbus,
AWA had been incurring losses of approximately $25 million per year from
its Columbus hub operations. As a result, we will discontinue utilizing
Columbus as a hub within the America West network and concentrate our
assets in our stronger hubs in Phoenix and Las Vegas.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In April 2003, after the commencement of military action in Iraq, we
committed to a plan to reduce management, professional and
administrative payroll costs which will result in fewer employees within
these work groups.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

In addition, we intend to ask our business partners and vendors
to reduce
their fees in order to further reduce costs and maintain sufficient liquidity
in this uncertain environment. We are also focusing on ways in which we can
conserve cash by minimizing capital expenditures and deferring discretionary
expenditures.

We believe near-term revenues will continue to be negatively
impacted by
the soft economic conditions and the decline in business traffic. In addition,
fuel prices have remained and may continue to remain well above historical
norms due to the continued military action in Iraq and continued political
tension in Venezuela. Although there can be no assurances, we believe that
cash flow from operating activities coupled with existing cash balances and
financing commitments will be adequate to fund our operating and capital needs
as well as enable us to maintain compliance with our various debt agreements
through at least December 31, 2003.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

Airline Operations Update

AWA has made significant strides in improving its operating
performance
over the last two and a half years since initiating comprehensive customer
service initiatives in July 2000. In 2002, the Company achieved record
operational performance, helped in part by reductions in flight schedules, for both
AWA and the airline industry in general, after September 11, 2001. In the
first quarter of 2003, overall operating performance was down from the record
performance achieved in 2002, but was still substantially better than
2001. Winter storms and certain runway construction at Phoenix
Sky Harbor International Airport, the Companys major hub, negatively impacted
performance in 2003. AWA reported the following operating statistics to the
U.S. Department of Transportation (DOT) for the first quarters of 2003, 2002
and 2001:

|                        |  |      |      |      |  |      |      |             |  |             |      |     |  |     |      |     |  |     |      |     |  |  |      |  |  |                |       |                |  |  |       |   |  |  |       |   |  |  |       |  
|----------------------- |  | ---- | ---- | ---- |  | ---- | ---- | ----------- |  | ----------- | ---- | --- |  | --- | ---- | --- |  | --- | ---- | --- |  |  | ---- |  |  | -------------- | ----- | -------------- |  |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|                        |  |      |      |      |  |      |      |             |  |             |      |     |  |     |      |     |  |     |      |     |  |  |      |  |  | Percent Change |       | Percent Change
|                        |  | 2003 |      | 2002 |  | 2001 |      | 2003 - 2002 |  | 2003 - 2001
|                        |  |      |      |      |  |      |      |             |  |            
|                        |  | Jan  |      | Feb  |  | Jan  |      | Feb         |  | Jan         |      | Feb |  | Jan |      | Feb |  | Jan |      | Feb
|                        |  |      |      |      |  |      |      |             |  |             |      |     |  |     |      |     |  |     |      |    
|On-time performance
(a) |  |      | 77.8 |      |  |      | 72.2 |             |  |             | 86.3 |     |  |     | 88.5 |     |  |     | 68.5 |     |  |  | 68.0 |  |  |                | (9.8  | )              |  |  | (18.4 | ) |  |  | 13.6  |   |  |  | 6.2   |  
|Completion factor
(b)   |  |      | 97.6 |      |  |      | 97.4 |             |  |             | 99.2 |     |  |     | 99.7 |     |  |     | 96.2 |     |  |  | 97.2 |  |  |                | (1.6  | )              |  |  | (2.3  | ) |  |  | 1.5   |   |  |  | 0.2   |  
|Mishandled baggage
(c)  |  |      | 4.50 |      |  |      | 4.31 |             |  |             | 3.68 |     |  |     | 3.21 |     |  |     | 5.88 |     |  |  | 4.89 |  |  |                | 22.3  |                |  |  | 34.3  |   |  |  | (23.5 | ) |  |  | (11.9 | )
|Customer complaints
(d) |  |      | 1.42 |      |  |      | 1.25 |             |  |             | 2.30 |     |  |     | 2.99 |     |  |     | 6.15 |     |  |  | 3.19 |  |  |                | (38.3 | )              |  |  | (58.2 | ) |  |  | (76.9 | ) |  |  | (60.8 | )



|(a) |  | Percentage of reported flight operations arriving on time.            
|--- |  | ----------------------------------------------------------------------
|   
|(b) |  | Percentage of scheduled flight operations completed.                  
|   
|(c) |  | Rate of mishandled baggage reports per 1,000 passengers.              
|   
|(d) |  | Rate of customer complaints filed with the DOT per 100,000
passengers.

Summary of Holdings Financial Results

Holdings recorded a consolidated net loss of
$62.0 million in the first
quarter of 2003, a diluted loss per share of $1.84. This compares to a
consolidated loss before the cumulative effect of a change in accounting
principle of $65.2 million, or $1.93 per diluted share, in the first quarter of
2002. Including the cumulative effect of a change in accounting principle
related to the Companys adoption of SFAS No. 142, Goodwill and Other
Intangible Assetson January 1, 2002, Holdings net loss for the first quarter
of 2002 was $273.5 million, or $8.10 per diluted share. The 2003 results
include an operating gain of $4.4 million related to the purchase and
subsequent exchange of an A320 airframe and an operating gain of $1.1 million
due to a revision of the estimated costs related to the early termination of
certain aircraft leases. These gains were offset in part by a special charge
of $1.0 million resulting from the elimination of AWAs hub operations in
Columbus, Ohio. See Note 5, Special Chargesin Notes to Condensed
Consolidated Financial Statements. The 2002 results included special charges
of $21.1 million primarily related to the restructuring completed on January
18, 2002 (see Note 5, Special Chargesin Notes to Condensed Consolidated
Financial Statements) and a nonoperating charge of $2.8 million related to the
write-off of the Companys investment in an e-commerce entity. See Note 6,
Nonoperating Income (Expense) - Other, Net in Notes to Condensed Consolidated
Financial Statements. The Company did not record an income tax benefit in the
first quarter of 2003. As discussed above under Restatement of Previously
Reported Amounts  Deferred Income Taxes,the Company expects to record a full
valuation allowance on future tax benefits until it returns to profitability.
The Company recorded an income tax benefit of $35.1 million in the first
quarter of 2002 on a pretax loss of $100.3 million. The 2002 income tax
benefit resulted from Holdings 2001 consolidated income tax return, which
included a claim to carryback losses incurred in 2001 to the tax years 1996
through 2000 due to a change in United States income tax law.

23



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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

RESULTS OF OPERATIONS

The following discussion provides an analysis of AWAs
results of
operations for the three months ended March 31, 2003 and material changes
compared to the three months ended March 31, 2002.

The table below sets forth selected operating data for AWA.

|                                                 |                       |  |                    |      |                |  |           |      |  |     |      |     | 
|------------------------------------------------ | --------------------- |  | ------------------ | ---- | -------------- |  | --------- | ---- |  | --- | ---- | --- | 
|                                                 |                       |  | Three Months Ended |      |                |  |          
|                                                 |                       |  | March 31,          |      | Percent Change
|                                                 |                       |  | 2003               |      | 2002           |  | 2003-2002
|                                                 |                       |  |                    |      |                |  |          
|Aircraft (end of
period)                         |                       |  | 142                |      |                |  | 143       |      |  |     | (0.7 | )  
|Average daily aircraft utilization (hours)
(a)   |                       |  | 9.9                |      |                |  | 8.8       |      |  |     | 12.5 |    
|Available seat miles (in millions)
(b)           |                       |  | 6,852              |      |                |  | 6,077     |      |  |     | 12.8 |    
|Block hours
(c)                                  |                       |  | 130,104            |      |                |  | 113,949   |      |  |     | 14.2 |    
|Average stage length (miles)
(d)                 |                       |  | 986                |      |                |  | 922       |      |  |     | 6.9  |    
|Average passenger journey (miles)
(e)            |                       |  | 1,434              |      |                |  | 1,358     |      |  |     | 5.6  |    
|Revenue passenger miles (in millions)
(f)        |                       |  | 4,872              |      |                |  | 4,262     |      |  |     | 14.3 |    
|Load factor (percent)
(g)                        |                       |  | 71.1               |      |                |  | 70.1      |      |  | 1.0 | pts 
|Passenger enplanements (in thousands)
(h)        |                       |  | 4,655              |      |                |  | 4,303     |      |  |     | 8.2  |    
|Yield per revenue passenger mile (cents)
(i)     |                       |  | 10.27              |      |                |  | 10.25     |      |  |     | 0.2  |    
|Revenue per available seat
mile:                 |                       |  |                    |      |                |  |           |      |  |     |      |    
|                                                 | Passenger (cents)
(j) |  |                    | 7.31 |                |  |           | 7.19 |  |     |      | 1.7 | 
|                                                 | Total (cents) (k)     |  |                    | 7.51 |                |  |           | 7.46 |  |     |      | 0.7 | 
|Fuel consumption (gallons in
millions)           |                       |  | 103.8              |      |                |  | 91.9      |      |  |     | 12.9 |    
|Average fuel price (cents per
gallon)            |                       |  | 90.0               |      |                |  | 63.2      |      |  |     | 42.4 |    
|Average number of full-time equivalent
employees |                       |  | 12,079             |      |                |  | 11,571    |      |  |     | 4.4  |    



|(a) |  | Average daily aircraft utilization  The average number of block
hours per day for all aircraft in service.                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Available seat mile (ASM)  A basic measure of production. It is
one seat flown one statute mile.                                                                                                                                
|   
|(c) |  | Block hours  The hours measured from the moment an aircraft first
moves under its own power, including taxi time, for the purposes of
flight until the aircraft is docked at the next point of landing and its
power is shut down.
|   
|(d) |  | Average stage length  The average of the distances flown on each
segment of every route.                                                                                                                                          
|   
|(e) |  | Average passenger journey  The average one-way trip measured in
statute miles for one passenger origination.                                                                                                                      
|   
|(f) |  | Revenue passenger mile (RPM)  A basic measure of sales volume. It
is one passenger flown one mile.                                                                                                                              
|   
|(g) |  | Load factor  The percentage of available seats that are filled with
revenue passengers.                                                                                                                                           
|   
|(h) |  | Passenger enplanements  The number of passengers on board an
aircraft including local, connecting and through passengers.                                                                                                         
|   
|(i) |  | Yield  A measure of airline revenue derived by dividing passenger
revenue by revenue passenger miles and expressed in cents per
mile.                                                                                             
|   
|(j) |  | Passenger revenue per available seat mile (RASM)  Total passenger
revenues divided by total available seat miles.                                                                                                               
|   
|(k) |  | Total revenue per available seat mile  Total operating revenues
divided by total available seat miles.                                                                                                                            

24



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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

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

|                                           |  |                    |      |                |  |               |      |  |  |  |       |  
|------------------------------------------ |  | ------------------ | ---- | -------------- |  | ------------- | ---- |  |  |  | ----- | -
|                                           |  | Three Months Ended |      |                |  |              
|                                           |  | March 31,          |      | Percent Change
|                                           |  | 2003               |      | 2002           |  | 2003-2002    
|                                           |  |                    |      |                |  |              
|                                           |  |                    |      |                |  | (as restated) |      | 
|(in cents)                                 |  |                    |      |                |  |               |      |  |  |  |       |  
|Salaries and related costs                 |  |                    | 2.34 |                |  |               | 2.34 |  |  |  | 0.2   |  
|Aircraft rents                             |  |                    | 1.10 |                |  |               | 1.20 |  |  |  | (8.6  | )
|Other rents and landing fees               |  |                    | 0.58 |                |  |               | 0.68 |  |  |  | (14.9 | )
|Aircraft fuel                              |  |                    | 1.36 |                |  |               | 0.96 |  |  |  | 42.5  |  
|Agency commissions                         |  |                    | 0.09 |                |  |               | 0.23 |  |  |  | (61.5 | )
|Aircraft maintenance materials and
repairs |  |                    | 0.94 |                |  |               | 1.07 |  |  |  | (12.7 | )
|Depreciation and amortization              |  |                    | 0.25 |                |  |               | 0.27 |  |  |  | (7.0  | )
|Special charges                            |  |                    |     |                |  |               | 0.35 |  |  |  |      |  
|Other                                      |  |                    | 1.53 |                |  |               | 1.72 |  |  |  | (11.0 | )
|                                           |  |                    |      |                |  |               |      |  |  |  |       |  
|                                           |  |                    | 8.19 |                |  |               | 8.82 |  |  |  | (7.1  | )
|                                           |  |                    |      |                |  |               |      |  |  |  |       |  

Three Months Ended March 31, 2003 and 2002

For the three months ended March 31, 2003, AWA
realized an operating loss
of $46.7 million compared to an operating loss of $82.3 million in last years
first quarter. Loss before income tax benefit and the cumulative effect of a
change in accounting principle for the three month period in 2003 was $62.7
million compared to $99.2 million in 2002.

Total operating revenues for the first quarter of 2003 were
$514.4
million. Passenger revenues were $500.6 million for the three months ended
March 31, 2003, an increase of $63.6 million or 14.6% from the 2002 quarter.
The increase in passenger revenues and traffic statistics for the first quarter
of 2003 as compared to the first quarter of 2002 is directly related to the
terrorist attacks of September 11, 2001 and the ensuing decline in demand for
air travel in the first quarter of 2002. A 14.3% increase in RPMs exceeded a
12.8% increase in ASMs, resulting in a 1.0 point increase in load factor, while
yield increased 0.2%. As a result, RASM increased 1.7% to 7.31 cents in 2003
from 7.19 cents in 2002. Cargo revenues were relatively flat
quarter-over-quarter while other revenues decreased 27.2% to $6.8 million for
the first quarter of 2003 due primarily to lower net revenues from AWAs code
sharing agreement with Mesa Airlines.

Operating expenses in the first quarter of 2003 increased
$25.2 million or
4.7% as compared to the 2002 first quarter. ASMs increased 12.8% primarily due
to a 12.5% increase in average daily aircraft utilization, which increased from
8.8 hours in the 2002 quarter to 9.9 hours in the 2003 quarter. As a result,
CASM decreased 7.1% to 8.19 cents in the first quarter of 2003 from 8.82 cents
for the comparable 2002 period. Significant changes in the components of CASM
are explained as follows:



| |  |  | Aircraft rent expense per ASM decreased 8.6%. A $2.3 million
increase in aircraft rent expense, primarily due to the sale and
leaseback of three previously owned aircraft in the second quarter of
2002, was more than offset by the 12.8% increase in ASMs.                                                                             
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Other rents and landing fees expense per ASM decreased 14.9% in the
first quarter of 2003 primarily due to the 12.8% increase in ASMs and a
$4.0 million decrease in the cost of borrowed parts.                                                                                                                                          
|
| |  |  | Aircraft fuel expense per ASM increased 42.5% primarily due to a
42.4% increase in the average price per gallon of fuel to 90.0 cents in
the 2003 quarter from 63.2 cents in 2002. In addition, a 12.9% increase
in fuel consumption due to higher block hours in the 2003 quarter was
substantially offset by the 12.8% increase in ASMs.
|
| |  |  | Agency commissions expense per ASM decreased 61.5% primarily due to
the elimination of base commission for travel agency tickets issued in
the United States, effective March 21, 2002.                                                                                                                                                   

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003



| |  |  | Aircraft maintenance materials and repairs expense per ASM decreased
12.7% primarily due to a decrease in the accrual for the estimated costs
of maintenance required to be performed upon the return of leased
aircraft ($5.0 million) and the 12.8% increase in ASMs.                                                                                                                   
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Depreciation and amortization expense per ASM decreased 7.0% due
primarily to lower airframe depreciation expense ($1.2 million) and the
12.8% increase in ASMs. This decrease was offset in part by higher
amortization expense related to computer hardware and software ($0.7
million) and aircraft leasehold improvements ($0.8 million).                                             
|
| |  |  | Other operating expenses per ASM decreased 11.0% due primarily to the
12.8% increase in ASMs. Increases in credit card fees ($1.8 million),
aircraft fuel taxes ($1.5 million), refueling and service checks ($1.0
million) and ground handling costs ($1.0 million) were substantially
offset by a $4.4 million gain related to the purchase and subsequent
exchange of an A320 airframe.

Net nonoperating expenses decreased $0.9 million to
$16.0 million in the
first quarter of 2003 from $16.9 million in the first quarter of 2002. Net
interest expense increased $1.3 million in the first quarter of 2003 due to
primarily to higher guarantee fees related to the government guaranteed loan
($3.0 million) which was offset in part by lower interest related to the 2001-1
pass through trusts ($1.5 million). Interest income decreased $1.4 million due
to lower average cash and short-term investment balances and lower interest
rates. The 2002 period also included a $2.8 million charge related to the
write-off of AWAs investment in an e-commerce entity. See
Note 7,
Nonoperating Income (Expense)  Other, Netin Notes to Condensed Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

At March 31, 2003, Holdings and AWAs
unrestricted cash and cash
equivalents and short-term investments were $309.7 million and $300.6 million,
respectively. Net cash used in operating activities for Holdings and AWA was
$21.6 million and $21.5 million, respectively in the first three months of
2003. The year-over-year decrease in net cash used in operating activities of
$85.1 million and $79.8 million for Holdings and AWA, respectively, was due
primarily to the payment in 2002 of amounts due vendors and aircraft lessors
that had been subject to the Companys cash conservation program prior to the
closing of the government loan in January 2002 and the payment of $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.

In the first three months of 2003, net cash provided by investing
activities was $1.3 million for both Holdings and AWA. Principal investing
activities during the first three months of 2003 included purchases of property
and equipment totaling $46.9 million, including $12.0 million related to the
purchase of an A320 airframe that was used to replace an airframe that was
damaged in an accident in August 2002, and sales of short-term investments
totaling $24.7 million. The 2003 period also included proceeds from the
disposition of assets totaling $23.5 million, including $12.6 million of
insurance proceeds and $3.6 million of scrap proceeds both
associated with the replaced A320
airframe discussed above, and $6.9 million related to the sale and leaseback of
29 jet bridges at Phoenix Sky Harbor International Airport. The 2002 period
included purchases of property and equipment totaling $43.7 million for
Holdings and $43.5 million for AWA and purchases of short-term investments
totaling $5.3 million for both Holdings and AWA.

In the first three months of 2003, net cash used in financing
activities
was $5.8 million for both Holdings and AWA due to repayments of debt. The 2002
period included proceeds from the issuance of debt totaling $430.5 million,
primarily related to the government guaranteed loan, payments of debt issue
costs totaling $12.0 million and debt repayments of $4.3 million.

Capital expenditures for the three months ended
March 31, 2003 were
approximately $46.9 million for both Holdings and AWA. Capital expenditures
for the three months ended March 31, 2002 were approximately $43.7 million for
Holdings and $43.5 million for AWA. Included in these amounts are capital
expenditures for capitalized maintenance of approximately $25.4 million and
$31.2 million for both Holdings and AWA for the three months ended March 31,
2003 and 2002, respectively.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

In April 2003, as a result of the commencement of military
action in Iraq,
we committed to a plan to reduce management, professional and administrative
payroll costs which will result in fewer employees within these workgroups. In
addition, our business partners and vendors will be asked to reduce their fees
in order to further reduce costs and maintain sufficient liquidity in this
uncertain environment.

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

In April 2003, the Senate and House of Representatives of the
United
States of America passed, and the President signed, a supplemental
appropriations bill to provide certain aviation-related assistance. The bill
includes the following key provisions:



| |  |  | $2.3 billion of the appropriation is for grants to be made by the
Transportation Security Administration (TSA) to U.S. air carriers
based on the proportional share each carrier has paid or collected as of
the date of enactment of the legislation for passenger security and air
carrier security fees. These amounts will be distributed not later than
30 days after the date of enactment of the legislation.                      
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The TSA will not impose passenger security fees during the period
beginning June 1, 2003 and ending September 30, 2003.                                                                                                                                                                                                                                                                                                                     
|
| |  |  | $100 million of the appropriation will be available to compensate air
carriers for the direct costs associated with the strengthening of
flight deck doors and locks on aircraft.                                                                                                                                                                                                                                                           
|
| |  |  | Aviation war risk insurance provided by the federal government is
extended until August 2004.                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Certain airlines that receive the aviation-related assistance must
agree to limit the total cash compensation for certain executive
officers during the 12-month period beginning April 1, 2003 to an amount
equal to the annual salary paid to that officer during the air carriers
fiscal year 2002. Any violation of this agreement will require the
carrier to repay to the government the amount reimbursed for airline
security fees.

We estimate that the amount of reimbursement we will receive
under the
legislation will be approximately $80 million.

Pass Through Trusts

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

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

27



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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

debt on the balance sheets of either AWA or Holdings.

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

Commitments

As of March 31, 2003, we had $715.7 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, $91.7 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
March 31, 2003.

|                                                              |                                            |   |                |       |      |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |        |           |        |  |        |           |         | 
|------------------------------------------------------------- | ------------------------------------------ | - | -------------- | ----- | ---- | - | ------- | ------ | ---- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | ------ | --------- | ------ |  | ------ | --------- | ------- | 
|                                                              |                                            |   |                |       |      |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |        | Beyond    |        |  |        |          
|                                                              |                                            |   | 2003           |       | 2004 |   | 2005    |        | 2006 |   | 2007    |        | 2007 |   | Total  
|                                                              |                                            |   |                |       |      |   |         |        |      |   |         |        |      |   |        
|                                                              |                                            |   | (in thousands)
|Long-term debt:                                               |                                            |   |                |       |      |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |        |           |        |  |        |           |        
|                                                              | Equipment notes  Non EETC
(1)             |   | $              | 5,370 |      |   | $       | 8,989  |      |   | $       | 8,305  |      |   | $       | 8,305  |  |   | $       | 7,771  |  |        | $         | 15,083 |  |        | $         | 53,823  | 
|                                                              | Promissory note (2)                        |   |                | 1,222 |      |   |         |       |      |   |         |       |      |   |         |       |  |   |         |       |  |        |           |       |  |        |           | 1,222   | 
|                                                              | Term loan(3)                               |   |                |      |      |   |         | 1,962  |      |   |         | 30,000 |      |   |         | 30,000 |  |   |         | 13,170 |  |        |           |       |  |        |           | 75,132  | 
|                                                              | 7.5% convertible senior notes due
2009 (4) |  |                |       |      |  |         |        |      |  |         |        |      |  |         |        |  |  |         |        |  | 97,894 |           |        |  | 97,894 |          
|                                                              | Government guaranteed loan
(5)             |   |                |      |      |   |         | 85,800 |      |   |         | 85,800 |      |   |         | 85,800 |  |   |         | 85,800 |  |        |           | 85,800 |  |        |           | 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   | 
|                                                              |                                            |   |                |       |      |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |        |           |        |  |        |           |         | 
|                                                              |                                            |   | 13,592         |       |      |   | 97,501  |        |      |   | 174,353 |        |      |   | 124,355 |        |  |   | 106,991 |        |  |        | 228,077   |        |  |        | 744,869   |        
|Cash aircraft rental payments
(9)                             |                                            |   | 210,852        |       |      |   | 303,903 |        |      |   | 286,240 |        |      |   | 262,325 |        |  |   | 248,501 |        |  |        | 1,965,540 |        |  |        | 3,277,361 |        
|Lease payments on equipment and
facility operating leases(10) |                                            |   | 14,225         |       |      |   | 17,782  |        |      |   | 17,251  |        |      |   | 15,485  |        |  |   | 14,125  |        |  |        | 74,731    |        |  |        | 153,599   |        
|Capital lease
obligations                                     |                                            |   | 3,815          |       |      |   | 4,278   |        |      |   | 4,298   |        |      |   | 4,655   |        |  |   | 1,685   |        |  |        |          |        |  |        | 18,731    |        
|Special facility revenue bonds
(11)                           |                                            |   | 1,362          |       |      |   | 1,362   |        |      |   | 1,362   |        |      |   | 1,362   |        |  |   | 1,362   |        |  |        | 37,469    |        |  |        | 44,279    |        
|Aircraft purchase commitments
(12)                            |                                            |   | 79,502         |       |      |   | 74,639  |        |      |   | 84,845  |        |      |   | 223,586 |        |  |   | 264,288 |        |  |        |          |        |  |        | 726,860   |        
|                                                              |                                            |   |                |       |      |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |        |           |        |  |        |           |         | 
|Total                                                         |                                            | $ | 323,348        |       |      | $ | 499,465 |        |      | $ | 568,349 |        |      | $ | 631,768 |        |  | $ | 636,952 |        |  | $      | 2,305,817 |        |  | $      | 4,965,699 |        
|                                                              |                                            |   |                |       |      |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |        |           |        |  |        |           |         | 



|(1) |  | Includes approximately $53.8 million of equipment notes with variable
interest rates of 2.25% to 2.63%, averaging 2.47%, installments due 2003
through 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(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 3.56% and $1.9 million of interest payable in
kind through March 31, 2003 at a fixed rate of 2%. Excludes $2.8 million
of interest payable in kind through December 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003



|(4)  |  | Includes $91.7 million face value of 7.5% convertible senior notes, due
2009, and $6.2 million of interest payable in kind through March 31, 2003.
Excludes $15.5 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 March 31,
2003, the balance of the convertible senior notes in the accompanying
condensed consolidated balance sheet is approximately $63.1 million.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(5)  |  | Government guaranteed loan includes $429.0 million due September 2008
with a variable interest rate of 1.8%. Guarantee fees of approximately
8.0% of the outstanding guaranteed principal balance in 2003 through 2008
are payable to the U.S. Treasury Department and other loan participants.                                                                                                                                                                                                                       
|    
|(6)  |  | Includes Arizona State loan of $1.5 million due December 2007 with a
variable interest rate of 4.88%.                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(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 2.59%.                                                                                                                                                                                                                                                                                                                                                                                                                       
|    
|(9)  |  | Includes non-cancelable operating leases for 130 aircraft with remaining
terms ranging from two 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 21 Airbus aircraft and spare
engines for delivery in 2003 through 2007.                                                                                                                                                                                                                                                                                                                                                                                                   

We expect to fund these cash obligations from funds provided
by
operations, the $200 million of financing commitments for Airbus aircraft
obtained in connection with the government loan, and future financings, if
necessary. The cash available to us from these sources, however, may not be
sufficient to cover these cash obligations because economic factors outside our
control may reduce the amount of cash generated by operations or increase our
costs. For instance, a further economic downturn or other events, including
continued military action in Iraq or the spread of severe acute respiratory
syndrome (SARS) in the United States, 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 required to obtain the entire amount of financing
commitment for two of the Airbus aircraft. In any of these cases, our
liquidity may be adversely affected and we may not have sufficient cash to
prepay the government loan and meet our other obligations. Moreover, certain
of our long-term debt agreements contain a $100 million minimum cash balance
requirement. As a result, we cannot use all of our available cash to fund
operations, capital expenditures and cash obligations without violating this
requirement.

Although there can be no assurances, we believe that cash
flow from
operating activities coupled with existing cash balances and financing
commitments will be adequate to fund our operating and capital needs as well as
enable us to maintain compliance with our various debt agreements through at
least December 31, 2003.

Financial Covenants and Credit Rating

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

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

economic and industry conditions.As of March 31, 2003, 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, Standard &
Poors again placed AWA on Credit Watch on March 18, 2003 and the outlook on
the industry and AWA 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 be high and our ability to incur additional debt may be
impaired.

OTHER INFORMATION

Labor Relations

On April 7, 2003, the Company announced that a
five-year collective
bargaining agreement had been ratified by AWAs stock clerks, represented by
the International Brotherhood of Teamsters (IBT). The stock clerks workgroup
includes approximately 55 employees.

On December 23, 2002, the Company announced that it
had reached a
tentative agreement with the Air Line Pilots Association (ALPA) on a new
contract for AWAs pilots. The tentative agreement was subject to a membership
ratification vote in March 2003. On March 18, 2003, ALPA informed the Company
that a majority of AWAs pilots voted against ratification of the tentative
agreement. The Company will resume mediated discussions with ALPA at a date to
be determined by the National Mediation Board (NMB). The Company cannot
predict the outcome of those discussions.

On August 19, 2002, the IBT filed an Application for
Investigation of
Representation Dispute with the NMB, seeking to represent approximately 4,000
passenger service representatives and reservations agents. An election was
conducted and on November 12, 2002, the NMB dismissed the case, finding that
the majority of employees (2,051 of 3,619) chose not to be represented by a
union. Thereafter, the IBT appealed the election results claiming the Company
improperly interfered with the employees voting rights. The Company
vigorously denied any wrongdoing and the matter is currently being investigated
by the NMB. The Company cannot predict the outcome of the investigation.

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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003



| |  |  | 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.                                                                                                                                                                                                       
|
| |  |  | 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.In the first
quarter of 2003, AWA paid Continental approximately $5.1 million and also
received approximately $1.7 million from Continental pursuant to these
agreements. In the first quarter of 2002, the amount paid to and received from
Continental pursuant to these agreements was $6.6 million and $3.9 million,
respectively.

Recently Issued Accounting Pronouncements

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest Entities.FIN No. 46 requires that companies that control another
entity through interests other than voting interests should consolidate the
controlled entity. FIN 46 is effective for variable interest entities created
after January 31, 2003 and to any variable interest entities in which the
Company obtains an interest after that date. FIN 46 is effective for the
quarter ending September 30, 2003 for variable interest entities in which the
Company held a variable interest that it acquired before February 1, 2003.
The Company has evaluated the provisions of FIN 46 and does not believe it to
be reasonably possible that
adoption would have a material effect on its financial condition or
results of operations.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

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 or AWAs results are:



| |  |  | the continuing impact of the terrorist attacks of September 11, 2001,
the potential impact of any future terrorist attacks and government
responses thereto, and the potential impact of the war against Iraq and
other hostilities;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the duration and extent of the current soft economic conditions;                                                                                                                                                                    
|
| |  |  | limitations on the Companys or AWAs ability to obtain additional
financing due to high levels of debt and the financial and other
covenants in its debt instruments;                                                              
|
| |  |  | the cyclical nature of the airline industry;                                                                                                                                                                                        
|
| |  |  | competitive practices in the airline industry;                                                                                                                                                                                      
|
| |  |  | the impact of changes in fuel prices; and                                                                                                                                                                                           
|
| |  |  | relations with unionized employees generally and the impact and outcome of labor negotiations.                                                                                                                                      

For additional discussion of such risks see Risk Factors Relating 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, and the impact of the war against Iraq and other hostilities
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;

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003



| |  |  | Any resulting decline in the value of the aircraft in our fleet; and                                                                                            
|- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  |  | 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.

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.

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

The terrorist attacks of September 11, 2001 resulted in staggering losses
to the insurance industry. These losses resulted in a significant increase in
our insurance premiums, which has negatively impacted our financial results.
In addition, these losses caused a general instability in that industry that
could affect some of our existing insurance carriers or our ability to obtain
future insurance coverage and resulted in a significant increase in insurance
premiums. To the extent that our existing insurance carriers are unable to
provide the insurance coverage contracted for, our insurance costs may further
increase.

Moreover, since September 11, 2001, AWA and other airlines have been
unable to obtain third party war risk (terrorism) insurance at reasonable rates
from the commercial insurance market and have been obtaining this insurance
through a special program administered by the FAA. Under the terms of the
Homeland Security Act of 2002, this insurance will expire on August 31, 2003
unless extend by the Secretary of Transportation until December 31, 2003.
Should the Federal insurance program terminate, as a result of competitive
pressures AWA and other airlines would be limited in their ability to pass
these additional costs to passengers and the increase in costs could be
material to AWAs financial condition.

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 and the impact of the war against Iraq have had a
substantial negative impact on our revenues and costs. Our revenues for 2002
have declined 1% as compared to 2001 and 13% compared to 2000. In addition, we
have experienced an increase in costs related to enhanced security measures,
aviation insurance and airport rents and landing fees. We do not expect our
revenues to increase significantly until general economic conditions improve
and we expect the threat of further terrorist attacks and continued military
action in Iraq and Afghanistan to continue to negatively impact our revenues
and costs in the near-term. We also expect that concerns surrounding the
transmission of SARS could result in a further decline in the demand for air
travel. 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 March 31, 2003, we owed approximately $715.7 million of debt. 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:

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003



| |  |  | 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
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 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 a breach of these covenants, a failure to make required payments or an
acceleration of our indebtedness, it is likely that credit card companies would
begin to withhold proceeds due to us from the sale of our tickets and our
lessors may attempt to exercise remedies under their respective leases. In
such a situation, it is unlikely we would be able to 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% of our total operating
expenses in 2002, price escalations or reductions in the supply of jet fuel
will increase our operating expenses and cause our operating results and net
income to decline. For example, with our current level of fuel consumption, a
one-cent per gallon increase in jet fuel prices will cause our annual operating
expense to increase by $4.4 million.

We have implemented a fuel-hedging program to manage the risk and effect
of fluctuating jet fuel prices on our business. Our hedging program is
intended to offset increases in jet fuel costs by using derivative instruments
keyed to the future price of heating oil, which is highly correlated to the
price of jet fuel delivered on the East Coast. Our hedging program does not
fully protect us against increasing jet fuel costs because our hedging program
does not cover all of our projected fuel volumes for 2003. Hedging transactions
are in place with respect to approximately 37% of remaining projected 2003 fuel
requirements, including 54% related to the second quarter of 2003, 35% related
to the third quarter of 2003 and 21% related to the fourth quarter of 2003. In
order to execute additional hedging transactions, we anticipate that we will
have to provide cash collateral or other credit support, which we may not be
able to provide in a cost-effective manner. Furthermore, our ability to
effectively hedge fuel prices is limited because we purchase a substantially
larger portion of our jet fuel requirements on the West Coast than our large
competitors and West Coast fuel prices are less correlated to heating oil
prices and other viable petroleum derivatives than East Coast fuel prices and,
therefore, more difficult to hedge. The effectiveness of our fuel-hedging
program may also be negatively impacted by the war against Iraq and terrorist
activity, including the aftermath of the terrorist attacks of September 11,
2001 and the resulting government responses. See 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.

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

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
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 and other groups of our
employees may seek union representation in the future. We currently are
negotiating a collective bargaining agreement with ALPA, which represents all
of our approximately 1,600 pilots. We had reached a tentative agreement with
ALPA in December 2002 on a new contract for AWAs pilots. However, in March
2003, ALPA informed us that a majority of AWAs pilots had voted against
ratification of the tentative agreement. We will resume mediated discussions
with ALPA at a date to be determined by the NMB. In addition, the IBT is
seeking to represent approximately 4,000 passenger service representatives and
reservation agents and has appealed the result of an election conducted
concerning union representation. We cannot predict the outcome of the current
negotiations with ALPA, IBTs appeal of election results or any future
negotiations relating to union representation or collective bargaining
agreements. Agreements reached in collective bargaining may increase operating
expenses and lower operating results and net income. This is particularly
significant because our current employee costs contribute substantially to the
low cost structure that we believe is one of our competitive strengths and
because 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 Aviation and Transportation
Security Act or otherwise by the FAA as a result of the recent terrorist
attacks are expected to continue to increase costs for us and the airline
industry as a whole. Depending on the implementation of these and other
laws, our operating costs could increase

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003

significantly. Certain governmental
agencies, such as the DOT and the FAA, have the authority to impose mandatory
orders, such as Airworthiness Directives in connection with our aircraft, and
civil penalties for violations of applicable laws and regulations, each of
which can result in material costs and adverse publicity. We cannot predict
which laws and regulations will be adopted or what other action regulators
might take. Accordingly, we cannot guarantee that future legislative and
regulatory acts will not have a material impact on our operating results.

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

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

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.
March 31, 2003

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 March 31, 2003, the Company had entered into costless collar
transactions which establish an upper and lower limit on heating oil futures
prices. These transactions are in place with respect to approximately 32% of
remaining projected 2003 fuel requirements, including 51% related to the second
quarter of 2003, 30% related to the third quarter of 2003 and 16% related to
the fourth quarter of 2003.

The use of such transactions in the Companys fuel hedging program could
result in the Company not benefiting from certain declines in heating oil
futures prices. At March 31, 2003, the Company estimates that a 10% increase
in heating oil futures prices would increase the fair value of the costless
collar transactions by approximately $2.8 million. The Company estimates that
a 10% decrease in heating oil futures prices would decrease the fair value of
the costless collar transactions by approximately $1.8 million.

As of April 23, 2003, approximately 37% of AWAs remaining 2003 fuel
requirements are hedged.

(b) Interest Rate Risk

The Companys exposure to interest rate risk relates primarily to its
variable rate long-term debt obligations. At March 31, 2003 the Companys
variable-rate long-term debt obligations of approximately $564.5 million
represented approximately 79% of its total long-term debt. If interest rates
increased 10% in 2003, the impact on the Companys results of operations would
not be material.




ITEM 4.       CONTROLS AND PROCEDURES

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, as amended) 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.
March 31, 2003

c.      Limitation on the Effectiveness of Controls



| |  | The Companys management, including the Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls and
procedures or our internal controls will prevent all error and all fraud.
A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if any, within the company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of
the control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions; over time, control may become
inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error
or fraud may occur and not be detected.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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AMERICA WEST HOLDINGS CORPORATION AND
AMERICA WEST AIRLINES, INC.
March 31, 2003




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, and Chief Financial Officer, Derek J. Kerr,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
| | 99.2    |  | Certification of AWAs Chief Executive Officer, W.
Douglas Parker, and Chief Financial Officer, Derek J. Kerr,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.    

|   |                                                                                                                                                                                                              | 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|b. | Reports on Form 8-K                                                                                                                                                                                         
|   |                                                                                                                                                                                                              | 
|   | Holdings and AWA filed a report on Form 8-K, dated February 10, 2003,
furnishing under Item 9 a press release, dated February 10, 2003,
announcing that AWA will eliminate hub operations in Columbus, Ohio. | 

39



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AMERICA WEST HOLDINGS CORPORATION
March 31, 2003




SIGNATURE

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

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

DATED: April 23, 2003




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 we 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;

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AMERICA WEST HOLDINGS CORPORATION
March 31, 2003

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: April 23, 2003 |  | /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 we 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;

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AMERICA WEST HOLDINGS CORPORATION
March 31, 2003

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: April 23, 2003 |  | /s/ Derek J. Kerr                                
|                     |  |                                                  
|                     |  |                                                  
|                     |  | Derek J. Kerr                                    
|                     |  | Senior Vice President and Chief Financial Officer

42



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AMERICA WEST AIRLINES, INC.
March 31, 2003

SIGNATURE

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

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

DATED: April 23, 2003

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 we 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;

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AMERICA WEST AIRLINES, INC.
March 31, 2003

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: April 23, 2003 |  | /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 we 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;

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AMERICA WEST AIRLINES, INC.
March 31, 2003

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: April 23, 2003 |  | /s/ Derek J. Kerr                                
|                     |  |                                                  
|                     |  |                                                  
|                     |  | Derek J. Kerr                                    
|                     |  | Senior Vice President and Chief Financial Officer

45



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EXHIBIT INDEX

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