##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2007
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period fromto
 US Airways Group, Inc.
      US Airways, Inc.
          þ o
  US Airways Group, Inc.
    
    Large accelerated filer   þ
    
    Accelerated filer   o
    
    Non-accelerated filer   oUS Airways, Inc.
    
    Large accelerated filer   o
    
    Accelerated filer   o
    
    Non-accelerated filer   þIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).US Airways Group, Inc.
    
    Yes o
    
    No þUS Airways, Inc.
    
    Yes o
    
    No þIndicate by check mark whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.US Airways Group, Inc.
    
    Yes þ
    
    No oUS Airways, Inc.
    
    Yes þ
    
    No o




---



##### 



US Airways Group, Inc.
Form 10-Q
Quarterly Period Ended September 30, 2007
Table of Contents
  
 PagePart I.
    
    Financial InformationItem 1A.
    
    Condensed Consolidated Financial Statements of US Airways Group, Inc.Condensed Consolidated Statements of Operations
    
    5Condensed Consolidated Balance Sheets
    
    6Condensed Consolidated Statements of Cash Flows
    
    7Notes to the Condensed Consolidated Financial Statements
    
    8Item 1B.
    
    Condensed Consolidated Financial Statements of US Airways, Inc.Condensed Consolidated Statements of Operations
    
    25Condensed Consolidated Balance Sheets
    
    26Condensed Consolidated Statements of Cash Flows
    
    27Notes to the Condensed Consolidated Financial Statements
    
    28Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    43Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    66Item 4.
    
    Controls and Procedures
    
    66Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    68Item 1A.
    
    Risk Factors
    
    68Item 6.
    
    Exhibits
    
    76Signatures
    
    
    
    77EX-10.1EX-10.2EX-10.3EX-10.4EX-31.1EX-31.2EX-31.3EX-31.4EX-32.1EX-32.2
  2




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded September 30,
    
    

Ended
September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues:Mainline passenger
    
    $
    2,133
    
    
    $
    2,052
    
    
    $
    6,233
    
    
    $
    6,048Express passenger
    
    
    692
    
    
    
    703
    
    
    
    2,039
    
    
    
    2,095Cargo
    
    
    32
    
    
    
    40
    
    
    
    102
    
    
    
    114Other
    
    
    179
    
    
    
    173
    
    
    
    550
    
    
    
    514Total operating revenues
    
    
    3,036
    
    
    
    2,968
    
    
    
    8,924
    
    
    
    8,771Operating expenses:Aircraft fuel and related taxes
    
    
    692
    
    
    
    719
    
    
    
    1,900
    
    
    
    1,943Loss (gain) on fuel hedging instruments, net
    
    
    (33
    )
    
    
    88
    
    
    
    (111
    )
    
    
    32Salaries and related costs
    
    
    555
    
    
    
    529
    
    
    
    1,659
    
    
    
    1,574Express expenses
    
    
    649
    
    
    
    653
    
    
    
    1,921
    
    
    
    1,930Aircraft rent
    
    
    182
    
    
    
    181
    
    
    
    542
    
    
    
    546Aircraft maintenance
    
    
    144
    
    
    
    142
    
    
    
    479
    
    
    
    432Other rent and landing fees
    
    
    141
    
    
    
    146
    
    
    
    408
    
    
    
    432Selling expenses
    
    
    116
    
    
    
    120
    
    
    
    347
    
    
    
    348Special items, net
    
    
    17
    
    
    
    27
    
    
    
    83
    
    
    
    18Depreciation and amortization
    
    
    47
    
    
    
    42
    
    
    
    137
    
    
    
    132Other
    
    
    324
    
    
    
    305
    
    
    
    952
    
    
    
    901Total operating expenses
    
    
    2,834
    
    
    
    2,952
    
    
    
    8,317
    
    
    
    8,288Operating income
    
    
    202
    
    
    
    16
    
    
    
    607
    
    
    
    483Nonoperating income (expense):Interest income
    
    
    43
    
    
    
    45
    
    
    
    131
    
    
    
    111Interest expense, net
    
    
    (66
    )
    
    
    (74
    )
    
    
    (206
    )
    
    
    (221
    )Other, net
    
    
    2
    
    
    
    (4
    )
    
    
    (11
    )
    
    
    (14
    )Total nonoperating expense, net
    
    
    (21
    )
    
    
    (33
    )
    
    
    (86
    )
    
    
    (124
    )Income (loss) before income taxes and cumulative effect of change in
accounting principle
    
    
    181
    
    
    
    (17
    )
    
    
    521
    
    
    
    359Income tax provision
    
    
    4
    
    
    
    61
    
    
    
    15
    
    
    
    68Income (loss) before cumulative effect of change in accounting principle
    
    
    177
    
    
    
    (78
    )
    
    
    506
    
    
    
    291Cumulative effect of change in accounting principle, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net income (loss)
    
    $
    177
    
    
    $
    (78
    )
    
    $
    506
    
    
    $
    292Earnings (loss) per common share:Basic:Before cumulative effect of change in accounting principle
    
    $
    1.93
    
    
    $
    (0.88
    )
    
    $
    5.54
    
    
    $
    3.41Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Earnings (loss) per share
    
    
    1.93
    
    
    
    (0.88
    )
    
    
    5.54
    
    
    
    3.42Diluted:Before cumulative effect of change in accounting principle
    
    $
    1.87
    
    
    $
    (0.88
    )
    
    $
    5.33
    
    
    $
    3.20Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Earnings (loss) per share
    
    
    1.87
    
    
    
    (0.88
    )
    
    
    5.33
    
    
    
    3.21Shares used for computation (in thousands):Basic
    
    
    91,542
    
    
    
    88,212
    
    
    
    91,461
    
    
    
    85,286Diluted
    
    
    95,492
    
    
    
    88,212
    
    
    
    95,776
    
    
    
    94,474
  5




---



##### Table of Contents



September 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    2,033
    
    
    $
    1,116Short-term investments
    
    
    647
    
    
    
    1,249Restricted cash
    
    
    2
    
    
    
    1Accounts receivable, net
    
    
    494
    
    
    
    388Materials and supplies, net
    
    
    256
    
    
    
    223Prepaid expenses and other
    
    
    516
    
    
    
    377Total current assets
    
    
    3,948
    
    
    
    3,354Property and equipmentFlight equipment
    
    
    2,298
    
    
    
    2,051Ground property and equipment
    
    
    672
    
    
    
    598Less accumulated depreciation and amortization
    
    
    (714
    )
    
    
    (583
    )2,256
    
    
    
    2,066Equipment purchase deposits
    
    
    78
    
    
    
    48Total property and equipment
    
    
    2,334
    
    
    
    2,114Other assetsGoodwill
    
    
    619
    
    
    
    629Other intangibles, net
    
    
    535
    
    
    
    554Restricted cash
    
    
    449
    
    
    
    666Other assets, net
    
    
    219
    
    
    
    259Total other assets
    
    
    1,822
    
    
    
    2,108Total assets
    
    $
    8,104
    
    
    $
    7,576LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    109
    
    
    $
    95Accounts payable
    
    
    391
    
    
    
    454Air traffic liability
    
    
    944
    
    
    
    847Accrued compensation and vacation
    
    
    214
    
    
    
    262Accrued taxes
    
    
    132
    
    
    
    181Other accrued expenses
    
    
    937
    
    
    
    873Total current liabilities
    
    
    2,727
    
    
    
    2,712Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    2,980
    
    
    
    2,907Deferred gains and credits
    
    
    177
    
    
    
    205Postretirement benefits other than pensions
    
    
    180
    
    
    
    187Employee benefit liabilities and other
    
    
    574
    
    
    
    595Total noncurrent liabilities and deferred credits
    
    
    3,911
    
    
    
    3,894Stockholders equityCommon stock, $0.01 par value; 200,000,000 shares authorized, 91,980,557 and 91,566,564
shares issued and outstanding at September 30, 2007; 91,697,896 and 91,283,903 shares
issued and outstanding at December 31, 2006
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    1,529
    
    
    
    1,501Accumulated other comprehensive income (loss)
    
    
    (35
    )
    
    
    3Accumulated deficit
    
    
    (16
    )
    
    
    (522
    )Treasury stock, common stock, 413,993 shares at September 30, 2007 and December 31, 2006
    
    
    (13
    )
    
    
    (13
    )Total stockholders equity
    
    
    1,466
    
    
    
    970Total liabilities and stockholders equity
    
    $
    8,104
    
    
    $
    7,576
  6




---



##### Table of Contents



Nine Months Ended September 30,2007
    
    
    2006Net cash provided by operating activities
    
    $
    440
    
    
    $
    477Cash flows from investing activitiesPurchases of property and equipment
    
    
    (345
    )
    
    
    (139
    )Purchases of short-term investments
    
    
    (2,560
    )
    
    
    (1,685
    )Sales of short-term investments
    
    
    3,124
    
    
    
    975Decrease in long-term restricted cash
    
    
    217
    
    
    
    157Proceeds from disposition of assets
    
    
    4
    
    
    
    4Increase in equipment purchase deposits
    
    
    (30
    )
    
    
    (8
    )Net cash provided by (used for) investing activities
    
    
    410
    
    
    
    (696
    )Cash flows from financing activitiesRepayments of debt
    
    
    (1,668
    )
    
    
    (1,165
    )Proceeds from issuance of debt
    
    
    1,732
    
    
    
    1,375Proceeds from issuance of common stock, net
    
    
    3
    
    
    
    38Net cash provided by financing activities
    
    
    67
    
    
    
    248Net increase in cash and cash equivalents
    
    
    917
    
    
    
    29Cash and cash equivalents at beginning of period
    
    
    1,116
    
    
    
    1,125Cash and cash equivalents at end of period
    
    $
    2,033
    
    
    $
    1,154Non-cash investing and financing activitiesUnrealized loss on available for sale securities
    
    $
    38
    
    
    $
    Notes payable cancelled under aircraft purchase agreement
    
    
    
    
    
    
    4Conversion of 7.5% Convertible Senior Notes, net
discount of $17 million, to common stock
    
    
    
    
    
    
    95Conversion of 7% Senior Convertible Notes
    
    
    
    
    
    
    21Equipment purchases financed by capital leases
    
    
    
    
    
    
    3Supplemental informationCash paid for interest, net of amounts capitalized
    
    $
    201
    
    
    $
    205Cash paid for income taxes
    
    
    4
    
    
    
    6
  7




---



##### Table of Contents



US Airways Group, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of presentation
     Recent Accounting Pronouncements
   8




---



##### Table of Contents



2. Special items, net
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Airbus restructuring (a)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (90
    )Merger related transition expenses (b)
    
    
    17
    
    
    
    27
    
    
    
    83
    
    
    
    108Special items, net
    
    $
    17
    
    
    $
    27
    
    
    $
    83
    
    
    $
    18
 
 (a)
    
    In connection with the merger and the Airbus Memorandum of Understanding (Airbus MOU)
executed between Airbus, US Airways Group, US Airways and AWA, certain aircraft firm orders
were restructured. In connection with that restructuring, US Airways Group and America West
Holdings were required to pay restructuring fees totaling $89 million by means of set-off
against existing equipment deposits of US Airways and AWA held by Airbus of $39 million and
$50 million, respectively. Also in 9




---



##### Table of Contents



connection with the Airbus MOU, US Airways and AWA entered into two loan agreements with
commitments of up to $161 million and $89 million. On March 31, 2006, the outstanding principal
and accrued interest on the $89 million loan was forgiven upon repayment in full of the $161
million loan in accordance with the terms of the Airbus loans. As a result, the Company
recognized a gain associated with the return of these equipment deposits upon forgiveness of the
loan totaling $90 million, consisting of the $89 million in equipment deposits and accrued
interest of $1 million.(b)
    
    In connection with the continuing effort to consolidate functions and integrate the Companys
organizations, procedures, and operations, the Company incurred $17 million of transition and
merger integration costs in the third quarter of 2007. These items included $1 million in
training and related expenses; $3 million in compensation expenses for equity awards granted
in connection with the merger; $5 million of aircraft livery costs; $7 million in professional
and technical fees related to the integration of the Companys airline operations systems and
$1 million of other expenses. During the third quarter of 2006, the Company incurred $27
million of transition and merger integration costs. These items included $11 million in
compensation expenses primarily for severance, retention payments and equity awards granted in
connection with the merger; $1 million of aircraft livery costs; $13 million in professional
and technical fees, including continuing professional fees associated with US Airways
bankruptcy proceedings and fees related to the integration of the Companys airline operations
systems; $1 million in employee moving expenses and $1 million of transition related sales and
marketing program expenses.In connection with the merger transition efforts noted above, the Company incurred $83 million of
transition and merger integration costs in the first nine months of 2007. These items included
$12 million in training and related expenses; $16 million in compensation expenses for equity
awards granted in connection with the merger; $15 million of aircraft livery costs; $30 million
in professional and technical fees related to the integration of the Companys airline operations
systems; $1 million in employee moving expenses; $4 million related to reservation system
migration expenses and $5 million of other expenses. During the first nine months of 2006, the
Company incurred $108 million of transition and merger integration costs. These items included
$39 million in compensation expenses primarily for severance, retention payments and equity
awards granted in connection with the merger; $10 million of aircraft livery costs; $29 million
in professional and technical fees, including continuing professional fees associated with US
Airways bankruptcy proceedings and fees related to the integration of the Companys airline
operations systems; $6 million in employee moving expenses; $11 million of net costs associated
with the integration of the AWA FlightFund and US Airways Dividend Miles frequent traveler
programs; $9 million in merger related aircraft lease return expenses; $2 million of transition
related sales and marketing program expenses; $1 million of programming service expenses and $1
million of other expenses. 10




---



##### Table of Contents



3. Earnings per share
  Three Months Ended
    
    

Nine
Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Basic earnings (loss) per share:Income (loss) before cumulative effect of change in accounting principle
    
    $
    177
    
    
    $
    (78
    )
    
    $
    506
    
    
    $
    291Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net income (loss)
    
    $
    177
    
    
    $
    (78
    )
    
    $
    506
    
    
    $
    292Weighted average common shares outstanding (in thousands)
    
    
    91,542
    
    
    
    88,212
    
    
    
    91,461
    
    
    
    85,286Basic earnings (loss) per share:Before cumulative effect of change in accounting principle
    
    $
    1.93
    
    
    $
    (0.88
    )
    
    $
    5.54
    
    
    $
    3.41Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Net earnings (loss) per share
    
    $
    1.93
    
    
    $
    (0.88
    )
    
    $
    5.54
    
    
    $
    3.42Diluted earnings (loss) per share:Income (loss) before cumulative effect of change in accounting principle
    
    $
    177
    
    
    $
    (78
    )
    
    $
    506
    
    
    $
    291Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net income (loss)
    
    
    177
    
    
    
    (78
    )
    
    
    506
    
    
    
    292Interest expense on 7.5% convertible senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Interest expense on 7.0% senior convertible notes
    
    
    1
    
    
    
    
    
    
    
    4
    
    
    
    7Income (loss) for purposes of computing diluted net income (loss) per
share
    
    $
    178
    
    
    $
    (78
    )
    
    $
    510
    
    
    $
    303Share computation (in thousands):Weighted average common shares outstanding
    
    
    91,542
    
    
    
    88,212
    
    
    
    91,461
    
    
    
    85,286Dilutive effect of stock awards and warrants
    
    
    900
    
    
    
    
    
    
    
    1,265
    
    
    
    2,085Assumed conversion of 7.5% convertible senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,406Assumed conversion of 7.0% senior convertible notes
    
    
    3,050
    
    
    
    
    
    
    
    3,050
    
    
    
    5,697Weighted average common shares outstanding as adjusted
    
    
    95,492
    
    
    
    88,212
    
    
    
    95,776
    
    
    
    94,474Diluted earnings (loss) per share:Before cumulative effect of change in accounting principle
    
    $
    1.87
    
    
    $
    (0.88
    )
    
    $
    5.33
    
    
    $
    3.20Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Earnings (loss) per share
    
    $
    1.87
    
    
    $
    (0.88
    )
    
    $
    5.33
    
    
    $
    3.21
    4. Stock options
 Agreements with ALPA 
 11




---



##### Table of Contents



Annual Incentive Grant 
   5. Debt
  September 30,
    
    
    December 31,2007
    
    
    2006SecuredCiticorp North America loan, variable interest rate of 7.63%, installments due through maturity
    
    $
    1,600
    
    
    $
    General Electric Capital Corporation loan
    
    
    
    
    
    
    1,250Equipment notes payable, variable interest rates of 6.83% to 9.62%
    
    
    1,322
    
    
    
    1,258Slot financing, interest rate of 8%, installments due through 2015
    
    
    47
    
    
    
    47Capital lease obligations, interest rate of 8%, installments due through 2021
    
    
    41
    
    
    
    41Senior secured discount notes, variable interest rate of 8.58%, installments due 2005 through 2009
    
    
    33
    
    
    
    33GE Credit Facility
    
    
    
    
    
    
    21Capital lease obligations, computer software, installments due through 2008
    
    
    2
    
    
    
    23,045
    
    
    
    2,652Unsecured7% senior convertible notes, interest only payments until due in 2020
    
    
    74
    
    
    
    74GE Engine Maintenance Term Note, variable interest rate of 9.37%, installments due 2008 through
2011
    
    
    55
    
    
    
    45Industrial development bonds, fixed interest rate of 6.3%, due 2023
    
    
    29
    
    
    
    29Barclays prepaid miles (formerly Juniper prepaid miles)
    
    
    
    
    
    
    325Note payable to Pension Benefit Guaranty Corporation, interest rate of 6%, interest only payments
until due in 2012
    
    
    10
    
    
    
    10168
    
    
    
    483Total long-term debt and capital lease obligations
    
    
    3,213
    
    
    
    3,135Less: Unamortized discount on debt
    
    
    (124
    )
    
    
    (133
    )Current maturities
    
    
    (109
    )
    
    
    (95
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    2,980
    
    
    $
    2,907
 Refinancing Transaction 
 12




---



##### Table of Contents




    
    The amended and restated loan agreement, dated April 7, 2006, entered into by US Airways
Group with General Electric Capital Corporation (GECC) and a syndicate of lenders. At the
time of the repayment, the total outstanding balance of the loan was $1.25 billion.
 
    
    The Barclays prepaid miles issued on October 3, 2005 in connection with the amended
co-branded credit card agreement dated August 8, 2005 between pre-merger US Airways Group,
AWA and Juniper Bank, a subsidiary of Barclays PLC that has since been renamed Barclays Bank
Delaware (Barclays). At the time of the repayment, the total outstanding balance was $325
million.
 
    
    The credit facility with GECC, amended in July 2005, with an original balance of $28
million. At the time of the repayment, the total outstanding balance of the loan was $19
million.
    6. Bankruptcy claims resolution
  13




---



##### Table of Contents



7. Income taxes
         14




---



##### Table of Contents



8. Express expenses
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Aircraft fuel and related taxes
    
    $
    199
    
    
    $
    210
    
    
    $
    539
    
    
    $
    585Salaries and related costs
    
    
    63
    
    
    
    58
    
    
    
    190
    
    
    
    189Capacity purchases
    
    
    248
    
    
    
    249
    
    
    
    767
    
    
    
    725Aircraft rent
    
    
    13
    
    
    
    11
    
    
    
    38
    
    
    
    47Aircraft maintenance
    
    
    20
    
    
    
    18
    
    
    
    59
    
    
    
    55Other rent and landing fees
    
    
    27
    
    
    
    33
    
    
    
    84
    
    
    
    97Selling expenses
    
    
    39
    
    
    
    36
    
    
    
    119
    
    
    
    111Depreciation and amortization
    
    
    6
    
    
    
    6
    
    
    
    17
    
    
    
    18Other expenses
    
    
    34
    
    
    
    32
    
    
    
    108
    
    
    
    103Express expenses
    
    $
    649
    
    
    $
    653
    
    
    $
    1,921
    
    
    $
    1,930
 9. Short-term investments
  September 30, 2007Estimated
    
    
    UnrealizedMarket Value
    
    
    gain (loss)Available for sale securities:Auction rate securities
    
    $
    373
    
    
    $
    (38
    )Held to maturity securities:Corporate bonds
    
    
    153
    
    
    
    n/aU.S. government sponsored enterprises
    
    
    82
    
    
    
    n/aCertificates of deposit
    
    
    20
    
    
    
    n/aMortgage and asset backed securities
    
    
    14
    
    
    
    n/aMunicipal bonds
    
    
    5
    
    
    
    n/aTotal held to maturity securities
    
    
    274
    
    
    
    n/aTotal short term investments
    
    $
    647
    
    
    $
    (38
    )
   15




---



##### Table of Contents



10. Other comprehensive income (loss), net
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    

September
30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    177
    
    
    $
    (78
    )
    
    $
    506
    
    
    $
    292Unrealized losses on available
for sale securities
    
    
    (38
    )
    
    
    
    
    
    
    (38
    )
    
    
    Total comprehensive income (loss)
    
    $
    139
    
    
    $
    (78
    )
    
    $
    468
    
    
    $
    292
  September 30,
    
    
    December 31,2007
    
    
    2006Accumulated net unrealized losses on available for
sale securities
    
    $
    (38
    )
    
    $
    Adjustment to initially apply FASB Statement No. 158
    
    
    3
    
    
    
    3Accumulated other comprehensive income (loss)
    
    $
    (35
    )
    
    $
    3
 16




---



##### Table of Contents



11. Financial information for subsidiary guarantors and non-guarantor subsidiaries
  
 US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues:Mainline passenger
    
    $
    
    
    
    $
    2,133
    
    
    $
    
    
    
    $
    
    
    
    $
    2,133Express passenger
    
    
    
    
    
    
    692
    
    
    
    
    
    
    
    
    
    
    
    692Cargo
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    32Other
    
    
    
    
    
    
    208
    
    
    
    427
    
    
    
    (456
    )
    
    
    179Total operating revenues
    
    
    
    
    
    
    3,065
    
    
    
    427
    
    
    
    (456
    )
    
    
    3,036Operating expenses:Aircraft fuel and related taxes
    
    
    
    
    
    
    692
    
    
    
    
    
    
    
    
    
    
    
    692Gain on fuel hedging
instruments, net
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    
    
    
    
    (33
    )Salaries and related costs
    
    
    
    
    
    
    555
    
    
    
    30
    
    
    
    (30
    )
    
    
    555Express expenses
    
    
    
    
    
    
    678
    
    
    
    
    
    
    
    (29
    )
    
    
    649Aircraft rent
    
    
    
    
    
    
    182
    
    
    
    22
    
    
    
    (22
    )
    
    
    182Aircraft maintenance
    
    
    
    
    
    
    144
    
    
    
    20
    
    
    
    (20
    )
    
    
    144Other rent and landing fees
    
    
    
    
    
    
    142
    
    
    
    5
    
    
    
    (6
    )
    
    
    141Selling expenses
    
    
    
    
    
    
    116
    
    
    
    
    
    
    
    
    
    
    
    116Special items, net
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17Depreciation and amortization
    
    
    
    
    
    
    48
    
    
    
    4
    
    
    
    (5
    )
    
    
    47Other
    
    
    
    
    
    
    322
    
    
    
    346
    
    
    
    (344
    )
    
    
    324Total operating expenses
    
    
    
    
    
    
    2,863
    
    
    
    427
    
    
    
    (456
    )
    
    
    2,834Operating income
    
    
    
    
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    202Nonoperating income (expense):Interest income
    
    
    23
    
    
    
    43
    
    
    
    
    
    
    
    (23
    )
    
    
    43Interest expense, net
    
    
    (32
    )
    
    
    (54
    )
    
    
    (3
    )
    
    
    23
    
    
    
    (66
    )Other, net
    
    
    186
    
    
    
    1
    
    
    
    
    
    
    
    (185
    )
    
    
    2Total nonoperating
income (expense), net
    
    
    177
    
    
    
    (10
    )
    
    
    (3
    )
    
    
    (185
    )
    
    
    (21
    )Income (loss) before income taxes
    
    
    177
    
    
    
    192
    
    
    
    (3
    )
    
    
    (185
    )
    
    
    181Income tax provision (benefit)
    
    
    
    
    
    
    5
    
    
    
    (1
    )
    
    
    
    
    
    
    4Net income (loss)
    
    $
    177
    
    
    $
    187
    
    
    $
    (2
    )
    
    $
    (185
    )
    
    $
    177
 17




---



##### Table of Contents



US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues:Mainline passenger
    
    $
    
    
    
    $
    6,233
    
    
    $
    
    
    
    $
    
    
    
    $
    6,233Express passenger
    
    
    
    
    
    
    2,039
    
    
    
    
    
    
    
    
    
    
    
    2,039Cargo
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    102Other
    
    
    
    
    
    
    637
    
    
    
    1,231
    
    
    
    (1,318
    )
    
    
    550Total operating revenues
    
    
    
    
    
    
    9,011
    
    
    
    1,231
    
    
    
    (1,318
    )
    
    
    8,924Operating expenses:Aircraft fuel and related taxes
    
    
    
    
    
    
    1,900
    
    
    
    
    
    
    
    
    
    
    
    1,900Gain on fuel hedging
instruments, net
    
    
    
    
    
    
    (111
    )
    
    
    
    
    
    
    
    
    
    
    (111
    )Salaries and related costs
    
    
    
    
    
    
    1,659
    
    
    
    91
    
    
    
    (91
    )
    
    
    1,659Express expenses
    
    
    
    
    
    
    1,997
    
    
    
    
    
    
    
    (76
    )
    
    
    1,921Aircraft rent
    
    
    
    
    
    
    542
    
    
    
    64
    
    
    
    (64
    )
    
    
    542Aircraft maintenance
    
    
    
    
    
    
    479
    
    
    
    58
    
    
    
    (58
    )
    
    
    479Other rent and landing fees
    
    
    
    
    
    
    409
    
    
    
    14
    
    
    
    (15
    )
    
    
    408Selling expenses
    
    
    
    
    
    
    347
    
    
    
    
    
    
    
    
    
    
    
    347Special items, net
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    83Depreciation and amortization
    
    
    
    
    
    
    142
    
    
    
    12
    
    
    
    (17
    )
    
    
    137Other
    
    
    7
    
    
    
    937
    
    
    
    1,005
    
    
    
    (997
    )
    
    
    952Total operating expenses
    
    
    7
    
    
    
    8,384
    
    
    
    1,244
    
    
    
    (1,318
    )
    
    
    8,317Operating income (loss)
    
    
    (7
    )
    
    
    627
    
    
    
    (13
    )
    
    
    
    
    
    
    607Nonoperating income (expense):Interest income
    
    
    69
    
    
    
    131
    
    
    
    1
    
    
    
    (70
    )
    
    
    131Interest expense, net
    
    
    (96
    )
    
    
    (171
    )
    
    
    (9
    )
    
    
    70
    
    
    
    (206
    )Other, net
    
    
    540
    
    
    
    3
    
    
    
    1
    
    
    
    (555
    )
    
    
    (11
    )Total nonoperating
income (expense), net
    
    
    513
    
    
    
    (37
    )
    
    
    (7
    )
    
    
    (555
    )
    
    
    (86
    )Income (loss) before income taxes
    
    
    506
    
    
    
    590
    
    
    
    (20
    )
    
    
    (555
    )
    
    
    521Income tax provision (benefit)
    
    
    
    
    
    
    16
    
    
    
    (1
    )
    
    
    
    
    
    
    15Net income (loss)
    
    $
    506
    
    
    $
    574
    
    
    $
    (19
    )
    
    $
    (555
    )
    
    $
    506
 18




---



##### Table of Contents



US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues:Mainline passenger
    
    $
    
    
    
    $
    2,052
    
    
    $
    
    
    
    $
    
    
    
    $
    2,052Express passenger
    
    
    
    
    
    
    703
    
    
    
    
    
    
    
    
    
    
    
    703Cargo
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    40Other
    
    
    
    
    
    
    211
    
    
    
    404
    
    
    
    (442
    )
    
    
    173Total operating
revenues
    
    
    
    
    
    
    3,006
    
    
    
    404
    
    
    
    (442
    )
    
    
    2,968Operating expenses:Aircraft fuel and related
taxes
    
    
    
    
    
    
    719
    
    
    
    
    
    
    
    
    
    
    
    719Loss on fuel hedging
instruments, net
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    88Salaries and related costs
    
    
    
    
    
    
    529
    
    
    
    29
    
    
    
    (29
    )
    
    
    529Express expenses
    
    
    
    
    
    
    683
    
    
    
    
    
    
    
    (30
    )
    
    
    653Aircraft rent
    
    
    
    
    
    
    181
    
    
    
    22
    
    
    
    (22
    )
    
    
    181Aircraft maintenance
    
    
    
    
    
    
    142
    
    
    
    17
    
    
    
    (17
    )
    
    
    142Other rent and landing fees
    
    
    
    
    
    
    147
    
    
    
    5
    
    
    
    (6
    )
    
    
    146Selling expenses
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    120Special items, net
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    27Depreciation and
amortization
    
    
    
    
    
    
    43
    
    
    
    5
    
    
    
    (6
    )
    
    
    42Other
    
    
    
    
    
    
    309
    
    
    
    328
    
    
    
    (332
    )
    
    
    305Total operating
expenses
    
    
    
    
    
    
    2,988
    
    
    
    406
    
    
    
    (442
    )
    
    
    2,952Operating income
(loss)
    
    
    
    
    
    
    18
    
    
    
    (2
    )
    
    
    
    
    
    
    16Nonoperating income (expense):Interest income
    
    
    25
    
    
    
    44
    
    
    
    1
    
    
    
    (25
    )
    
    
    45Interest expense, net
    
    
    (32
    )
    
    
    (64
    )
    
    
    (3
    )
    
    
    25
    
    
    
    (74
    )Other, net
    
    
    (71
    )
    
    
    1
    
    
    
    
    
    
    
    66
    
    
    
    (4
    )Total nonoperating
expense, net
    
    
    (78
    )
    
    
    (19
    )
    
    
    (2
    )
    
    
    66
    
    
    
    (33
    )Loss before income taxes
    
    
    (78
    )
    
    
    (1
    )
    
    
    (4
    )
    
    
    66
    
    
    
    (17
    )Income tax provision
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    61Net loss
    
    $
    (78
    )
    
    $
    (62
    )
    
    $
    (4
    )
    
    $
    66
    
    
    $
    (78
    )
 19




---



##### Table of Contents



US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues:Mainline passenger
    
    $
    
    
    
    $
    6,048
    
    
    $
    
    
    
    $
    
    
    
    $
    6,048Express passenger
    
    
    
    
    
    
    2,095
    
    
    
    
    
    
    
    
    
    
    
    2,095Cargo
    
    
    
    
    
    
    114
    
    
    
    
    
    
    
    
    
    
    
    114Other
    
    
    
    
    
    
    619
    
    
    
    1,039
    
    
    
    (1,144
    )
    
    
    514Total operating revenues
    
    
    
    
    
    
    8,876
    
    
    
    1,039
    
    
    
    (1,144
    )
    
    
    8,771Operating expenses:Aircraft fuel and related taxes
    
    
    
    
    
    
    1,943
    
    
    
    
    
    
    
    
    
    
    
    1,943Loss on fuel hedging instruments, net
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    32Salaries and related costs
    
    
    
    
    
    
    1,574
    
    
    
    89
    
    
    
    (89
    )
    
    
    1,574Express expenses
    
    
    
    
    
    
    2,020
    
    
    
    
    
    
    
    (90
    )
    
    
    1,930Aircraft rent
    
    
    
    
    
    
    546
    
    
    
    65
    
    
    
    (65
    )
    
    
    546Aircraft maintenance
    
    
    
    
    
    
    432
    
    
    
    51
    
    
    
    (51
    )
    
    
    432Other rent and landing fees
    
    
    
    
    
    
    434
    
    
    
    15
    
    
    
    (17
    )
    
    
    432Selling expenses
    
    
    
    
    
    
    348
    
    
    
    
    
    
    
    
    
    
    
    348Special items, net
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    18Depreciation and amortization
    
    
    
    
    
    
    136
    
    
    
    14
    
    
    
    (18
    )
    
    
    132Other
    
    
    2
    
    
    
    910
    
    
    
    803
    
    
    
    (814
    )
    
    
    901Total operating expenses
    
    
    2
    
    
    
    8,393
    
    
    
    1,037
    
    
    
    (1,144
    )
    
    
    8,288Operating income (loss)
    
    
    (2
    )
    
    
    483
    
    
    
    2
    
    
    
    
    
    
    
    483Nonoperating income (expense):Interest income
    
    
    54
    
    
    
    111
    
    
    
    2
    
    
    
    (56
    )
    
    
    111Interest expense, net
    
    
    (66
    )
    
    
    (201
    )
    
    
    (10
    )
    
    
    56
    
    
    
    (221
    )Other, net
    
    
    306
    
    
    
    (13
    )
    
    
    1
    
    
    
    (308
    )
    
    
    (14
    )Total nonoperating income
(expense), net
    
    
    294
    
    
    
    (103
    )
    
    
    (7
    )
    
    
    (308
    )
    
    
    (124
    )Income (loss) before income taxes and
cumulative effect of change in accounting
principle
    
    
    292
    
    
    
    380
    
    
    
    (5
    )
    
    
    (308
    )
    
    
    359Income tax provision
    
    
    
    
    
    
    66
    
    
    
    2
    
    
    
    
    
    
    
    68Income (loss) before cumulative effect of
change in accounting principle
    
    
    292
    
    
    
    314
    
    
    
    (7
    )
    
    
    (308
    )
    
    
    291Cumulative effect of change in
accounting principle, net
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Net income (loss)
    
    $
    292
    
    
    $
    315
    
    
    $
    (7
    )
    
    $
    (308
    )
    
    $
    292
 20




---



##### Table of Contents



US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assetsCash and cash equivalents
    
    $
    5
    
    
    $
    2,027
    
    
    $
    1
    
    
    $
    
    
    
    $
    2,033Short-term investments
    
    
    
    
    
    
    647
    
    
    
    
    
    
    
    
    
    
    
    647Restricted cash
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Accounts receivable, net
    
    
    
    
    
    
    484
    
    
    
    10
    
    
    
    
    
    
    
    494Receivables from related parties, net
    
    
    1,210
    
    
    
    
    
    
    
    
    
    
    
    (1,210
    )
    
    
    Materials and supplies, net
    
    
    
    
    
    
    218
    
    
    
    38
    
    
    
    
    
    
    
    256Prepaid expenses and other
    
    
    
    
    
    
    507
    
    
    
    9
    
    
    
    
    
    
    
    516Total current assets
    
    
    1,215
    
    
    
    3,885
    
    
    
    58
    
    
    
    (1,210
    )
    
    
    3,948Property and equipmentFlight equipment
    
    
    
    
    
    
    2,202
    
    
    
    96
    
    
    
    
    
    
    
    2,298Ground property and equipment
    
    
    
    
    
    
    589
    
    
    
    83
    
    
    
    
    
    
    
    672Less accumulated depreciation and amortization
    
    
    
    
    
    
    (660
    )
    
    
    (54
    )
    
    
    
    
    
    
    (714
    )
    
    
    
    2,131
    
    
    
    125
    
    
    
    
    
    
    
    2,256Equipment purchase deposits
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    78Total property and equipment
    
    
    
    
    
    
    2,209
    
    
    
    125
    
    
    
    
    
    
    
    2,334Other assetsGoodwill
    
    
    
    
    
    
    619
    
    
    
    
    
    
    
    
    
    
    
    619Other intangibles, net
    
    
    
    
    
    
    495
    
    
    
    40
    
    
    
    
    
    
    
    535Restricted cash
    
    
    
    
    
    
    449
    
    
    
    
    
    
    
    
    
    
    
    449Other assets, net
    
    
    1,958
    
    
    
    210
    
    
    
    2
    
    
    
    (1,951
    )
    
    
    219Total other assets
    
    
    1,958
    
    
    
    1,773
    
    
    
    42
    
    
    
    (1,951
    )
    
    
    1,822Total assets
    
    $
    3,173
    
    
    $
    7,867
    
    
    $
    225
    
    
    $
    (3,161
    )
    
    $
    8,104LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    16
    
    
    $
    92
    
    
    $
    1
    
    
    $
    
    
    
    $
    109Accounts payable
    
    
    
    
    
    
    369
    
    
    
    22
    
    
    
    
    
    
    
    391Payables to related parties, net
    
    
    
    
    
    
    1,097
    
    
    
    113
    
    
    
    (1,210
    )
    
    
    Air traffic liability
    
    
    
    
    
    
    944
    
    
    
    
    
    
    
    
    
    
    
    944Accrued compensation and vacation
    
    
    
    
    
    
    206
    
    
    
    8
    
    
    
    
    
    
    
    214Accrued taxes
    
    
    (3
    )
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    132Other accrued expenses
    
    
    2
    
    
    
    916
    
    
    
    19
    
    
    
    
    
    
    
    937Total current liabilities
    
    
    15
    
    
    
    3,759
    
    
    
    163
    
    
    
    (1,210
    )
    
    
    2,727Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current
maturities
    
    
    1,657
    
    
    
    1,293
    
    
    
    30
    
    
    
    
    
    
    
    2,980Deferred gains and credits
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    177Postretirement benefits other than pensions
    
    
    
    
    
    
    178
    
    
    
    2
    
    
    
    
    
    
    
    180Employee benefit liabilities and other
    
    
    
    
    
    
    555
    
    
    
    19
    
    
    
    
    
    
    
    574Total noncurrent liabilities and deferred credits
    
    
    1,657
    
    
    
    2,203
    
    
    
    51
    
    
    
    
    
    
    
    3,911Stockholders equityCommon stock
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Additional paid-in capital
    
    
    1,529
    
    
    
    1,845
    
    
    
    46
    
    
    
    (1,891
    )
    
    
    1,529Accumulated other comprehensive income (loss)
    
    
    
    
    
    
    (38
    )
    
    
    3
    
    
    
    
    
    
    
    (35
    )Retained earnings (deficit)
    
    
    (16
    )
    
    
    98
    
    
    
    (38
    )
    
    
    (60
    )
    
    
    (16
    )Treasury stock
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Total stockholders equity
    
    
    1,501
    
    
    
    1,905
    
    
    
    11
    
    
    
    (1,951
    )
    
    
    1,466Total liabilities and stockholders equity
    
    $
    3,173
    
    
    $
    7,867
    
    
    $
    225
    
    
    $
    (3,161
    )
    
    $
    8,104
 21




---



##### Table of Contents



US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assetsCash and cash equivalents
    
    $
    2
    
    
    $
    1,110
    
    
    $
    4
    
    
    $
    
    
    
    $
    1,116Short-term investments
    
    
    
    
    
    
    1,249
    
    
    
    
    
    
    
    
    
    
    
    1,249Restricted cash
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Accounts receivable, net
    
    
    
    
    
    
    383
    
    
    
    5
    
    
    
    
    
    
    
    388Receivables from related parties, net
    
    
    2,711
    
    
    
    
    
    
    
    
    
    
    
    (2,711
    )
    
    
    Materials and supplies, net
    
    
    
    
    
    
    187
    
    
    
    36
    
    
    
    
    
    
    
    223Prepaid expenses and other
    
    
    
    
    
    
    351
    
    
    
    26
    
    
    
    
    
    
    
    377Total current assets
    
    
    2,713
    
    
    
    3,281
    
    
    
    71
    
    
    
    (2,711
    )
    
    
    3,354Property and equipmentFlight equipment
    
    
    
    
    
    
    1,965
    
    
    
    86
    
    
    
    
    
    
    
    2,051Ground property and equipment
    
    
    
    
    
    
    518
    
    
    
    80
    
    
    
    
    
    
    
    598Less accumulated depreciation and amortization
    
    
    
    
    
    
    (540
    )
    
    
    (43
    )
    
    
    
    
    
    
    (583
    )
    
    
    
    1,943
    
    
    
    123
    
    
    
    
    
    
    
    2,066Equipment purchase deposits
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    48Total property and equipment
    
    
    
    
    
    
    1,991
    
    
    
    123
    
    
    
    
    
    
    
    2,114Other assetsGoodwill
    
    
    
    
    
    
    629
    
    
    
    
    
    
    
    
    
    
    
    629Other intangibles, net
    
    
    
    
    
    
    513
    
    
    
    41
    
    
    
    
    
    
    
    554Restricted cash
    
    
    
    
    
    
    666
    
    
    
    
    
    
    
    
    
    
    
    666Other assets, net
    
    
    (420
    )
    
    
    240
    
    
    
    3
    
    
    
    436
    
    
    
    259Total other assets
    
    
    (420
    )
    
    
    2,048
    
    
    
    44
    
    
    
    436
    
    
    
    2,108Total assets
    
    $
    2,293
    
    
    $
    7,320
    
    
    $
    238
    
    
    $
    (2,275
    )
    
    $
    7,576LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    
    
    
    $
    93
    
    
    $
    2
    
    
    $
    
    
    
    $
    95Accounts payable
    
    
    
    
    
    
    436
    
    
    
    18
    
    
    
    
    
    
    
    454Payables to related parties, net
    
    
    
    
    
    
    2,607
    
    
    
    104
    
    
    
    (2,711
    )
    
    
    Air traffic liability
    
    
    
    
    
    
    847
    
    
    
    
    
    
    
    
    
    
    
    847Accrued compensation and vacation
    
    
    1
    
    
    
    250
    
    
    
    11
    
    
    
    
    
    
    
    262Accrued taxes
    
    
    
    
    
    
    180
    
    
    
    1
    
    
    
    
    
    
    
    181Other accrued expenses
    
    
    1
    
    
    
    850
    
    
    
    22
    
    
    
    
    
    
    
    873Total current liabilities
    
    
    2
    
    
    
    5,263
    
    
    
    158
    
    
    
    (2,711
    )
    
    
    2,712Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current
maturities
    
    
    1,324
    
    
    
    1,556
    
    
    
    27
    
    
    
    
    
    
    
    2,907Deferred gains and credits
    
    
    
    
    
    
    205
    
    
    
    
    
    
    
    
    
    
    
    205Postretirement benefits other than pensions
    
    
    
    
    
    
    183
    
    
    
    4
    
    
    
    
    
    
    
    187Employee benefit liabilities and other
    
    
    
    
    
    
    578
    
    
    
    17
    
    
    
    
    
    
    
    595Total noncurrent liabilities and deferred credits
    
    
    1,324
    
    
    
    2,522
    
    
    
    48
    
    
    
    
    
    
    
    3,894Stockholders equityCommon stock
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Additional paid-in capital
    
    
    1,501
    
    
    
    11
    
    
    
    48
    
    
    
    (59
    )
    
    
    1,501Accumulated other comprehensive income
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Accumulated deficit
    
    
    (522
    )
    
    
    (476
    )
    
    
    (19
    )
    
    
    495
    
    
    
    (522
    )Treasury stock
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Total stockholders equity
    
    
    967
    
    
    
    (465
    )
    
    
    32
    
    
    
    436
    
    
    
    970Total liabilities and stockholders equity
    
    $
    2,293
    
    
    $
    7,320
    
    
    $
    238
    
    
    $
    (2,275
    )
    
    $
    7,576
 22




---



##### Table of Contents



US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used for) operating activities
    
    $
    (25
    )
    
    $
    456
    
    
    $
    9
    
    
    $
    
    
    
    $
    440Cash flows from investing activitiesPurchases of property and equipment
    
    
    
    
    
    
    (333
    )
    
    
    (12
    )
    
    
    
    
    
    
    (345
    )Purchases of short-term investments
    
    
    
    
    
    
    (2,560
    )
    
    
    
    
    
    
    
    
    
    
    (2,560
    )Sales of short-term investments
    
    
    
    
    
    
    3,124
    
    
    
    
    
    
    
    
    
    
    
    3,124Decrease in long-term restricted cash
    
    
    
    
    
    
    217
    
    
    
    
    
    
    
    
    
    
    
    217Proceeds from disposition of assets
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Increase in equipment purchase deposits
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    
    
    
    
    (30
    )Net cash provided by (used for) investing activities
    
    
    
    
    
    
    422
    
    
    
    (12
    )
    
    
    
    
    
    
    410Cash flows from financing activitiesRepayments of debt
    
    
    (1,575
    )
    
    
    (93
    )
    
    
    
    
    
    
    
    
    
    
    (1,668
    )Proceeds from issuance of debt
    
    
    1,600
    
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    1,732Proceeds from issuance of common stock, net
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Net cash provided by financing activities
    
    
    28
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    67Net increase (decrease) in cash and cash equivalents
    
    
    3
    
    
    
    917
    
    
    
    (3
    )
    
    
    
    
    
    
    917Cash and cash equivalents at beginning of period
    
    
    2
    
    
    
    1,111
    
    
    
    3
    
    
    
    
    
    
    
    1,116Cash and cash equivalents at end of period
    
    $
    5
    
    
    $
    2,028
    
    
    $
    
    
    
    $
    
    
    
    $
    2,033
 
 US Airways Group,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US AirwaysInc. (Parent
    
    
    Subsidiary
    
    
    Non-Guarantor
    
    
    
    
    
    
    Group, Inc.Company Only)
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used for) operating activities
    
    $
    (9
    )
    
    $
    502
    
    
    $
    (16
    )
    
    $
    
    
    
    $
    477Cash flows from investing activitiesPurchases of property and equipment
    
    
    
    
    
    
    (131
    )
    
    
    (8
    )
    
    
    
    
    
    
    (139
    )Purchases of short-term investments
    
    
    
    
    
    
    (1,685
    )
    
    
    
    
    
    
    
    
    
    
    (1,685
    )Sales of short-term investments
    
    
    
    
    
    
    975
    
    
    
    
    
    
    
    
    
    
    
    975Decrease in long-term restricted cash
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    
    
    
    
    157Proceeds from disposition of assets
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Increase in equipment purchase deposits
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (8
    )Net cash used for investing activities
    
    
    
    
    
    
    (688
    )
    
    
    (8
    )
    
    
    
    
    
    
    (696
    )Cash flows from financing activitiesRepayments of debt
    
    
    (1,076
    )
    
    
    (89
    )
    
    
    
    
    
    
    
    
    
    
    (1,165
    )Proceeds from issuance of debt
    
    
    1,327
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    1,375Proceeds from issuance of common stock, net
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38Net increase (decrease) in payables to related parties
    
    
    (286
    )
    
    
    262
    
    
    
    24
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    3
    
    
    
    221
    
    
    
    24
    
    
    
    
    
    
    
    248Net increase (decrease) in cash and cash equivalents
    
    
    (6
    )
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    29Cash and cash equivalents at beginning of period
    
    
    8
    
    
    
    1,116
    
    
    
    1
    
    
    
    
    
    
    
    1,125Cash and cash equivalents at end of period
    
    $
    2
    
    
    $
    1,151
    
    
    $
    1
    
    
    $
    
    
    
    $
    1,154
 23




---



##### Table of Contents



12. Airbus subsequent event
  
    
    An Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, which supersedes
the AWA A319/A320 Purchase Agreement. The terms of the amended and restated purchase
agreement encompass the purchase of 60 new narrow-body aircraft, including ten A319
aircraft, 40 A320 aircraft, and ten A321 aircraft, with conversion rights, in addition to
the 37 aircraft from the previous A319/A320 Purchase Agreement. Deliveries of the aircraft
under this agreement, including the 37 aircraft from the previous purchase agreement, will
run through 2012. US Airways expects to use the 60 A320 family aircraft to replace 60
older aircraft in the airlines fleet. The amended and restated purchase agreement also
provides US Airways with certain conversion rights, as well as purchase rights for the
acquisition of additional A320 family aircraft, subject to certain terms and conditions.
In addition, the amended and restated purchase agreement revises the delivery schedule for
15 A318 aircraft and provides US Airways with certain other rights with respect thereto.
    
    An Amended and Restated Airbus A350 XWB Purchase Agreement, which supersedes the A350
Purchase Agreement dated September 27, 2005 between US Airways Group, US Airways, AWA and
AVSA, S.A.R.L. (now Airbus S.A.S.). The new purchase agreement increases the number of firm
order aircraft from 20 A350 aircraft to 18 A350-800 XWB aircraft and four A350-900 XWB
aircraft, with the option to convert these aircraft to other A350 models, subject to
certain terms and conditions. Deliveries for the 22 A350 XWB aircraft will begin in 2014
and extend through 2017. US Airways expects to use these aircraft for modest international
expansion or replacement of existing older technology aircraft, as market conditions
warrant. The Amended and Restated Airbus A350 XWB Purchase Agreement also gives US Airways
purchase rights for the acquisition of additional A350 XWB aircraft, subject to certain
terms and conditions.
    
    An Airbus A330 Purchase Agreement which provides for the purchase by US Airways of ten
firm order A330-200 aircraft with deliveries in 2009 and 2010. US Airways expects to use
these aircraft to facilitate the retirement of its existing B767 fleet. The Airbus A330
Purchase Agreement also provides US Airways with purchase rights for the acquisition of
additional A330-200 aircraft, subject to certain terms and conditions.
    24




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues:Mainline passenger
    
    $
    2,133
    
    
    $
    2,052
    
    
    $
    6,233
    
    
    $
    6,048Express passenger
    
    
    692
    
    
    
    703
    
    
    
    2,039
    
    
    
    2,095Cargo
    
    
    32
    
    
    
    40
    
    
    
    102
    
    
    
    114Other
    
    
    208
    
    
    
    211
    
    
    
    637
    
    
    
    619Total operating revenues
    
    
    3,065
    
    
    
    3,006
    
    
    
    9,011
    
    
    
    8,876Operating expenses:Aircraft fuel and related taxes
    
    
    692
    
    
    
    719
    
    
    
    1,900
    
    
    
    1,943Loss (gain) on fuel hedging instruments, net
    
    
    (33
    )
    
    
    88
    
    
    
    (111
    )
    
    
    32Salaries and related costs
    
    
    555
    
    
    
    529
    
    
    
    1,659
    
    
    
    1,574Express expenses
    
    
    678
    
    
    
    683
    
    
    
    1,997
    
    
    
    2,020Aircraft rent
    
    
    182
    
    
    
    181
    
    
    
    542
    
    
    
    546Aircraft maintenance
    
    
    144
    
    
    
    142
    
    
    
    479
    
    
    
    432Other rent and landing fees
    
    
    141
    
    
    
    146
    
    
    
    408
    
    
    
    432Selling expenses
    
    
    116
    
    
    
    120
    
    
    
    347
    
    
    
    348Special items, net
    
    
    17
    
    
    
    27
    
    
    
    83
    
    
    
    18Depreciation and amortization
    
    
    49
    
    
    
    44
    
    
    
    143
    
    
    
    138Other
    
    
    322
    
    
    
    309
    
    
    
    937
    
    
    
    910Total operating expenses
    
    
    2,863
    
    
    
    2,988
    
    
    
    8,384
    
    
    
    8,393Operating income
    
    
    202
    
    
    
    18
    
    
    
    627
    
    
    
    483Nonoperating income (expense):Interest income
    
    
    43
    
    
    
    44
    
    
    
    131
    
    
    
    111Interest expense, net
    
    
    (55
    )
    
    
    (65
    )
    
    
    (174
    )
    
    
    (205
    )Other, net
    
    
    2
    
    
    
    2
    
    
    
    6
    
    
    
    (9
    )Total nonoperating expense, net
    
    
    (10
    )
    
    
    (19
    )
    
    
    (37
    )
    
    
    (103
    )Income (loss) before income taxes and cumulative effect of change in
accounting principle
    
    
    192
    
    
    
    (1
    )
    
    
    590
    
    
    
    380Income tax provision
    
    
    5
    
    
    
    61
    
    
    
    16
    
    
    
    66Income (loss) before cumulative effect of change in accounting principle
    
    
    187
    
    
    
    (62
    )
    
    
    574
    
    
    
    314Cumulative effect of change in accounting principle, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net income (loss)
    
    $
    187
    
    
    $
    (62
    )
    
    $
    574
    
    
    $
    315
  25




---



##### Table of Contents



September 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    2,028
    
    
    $
    1,111Short-term investments
    
    
    647
    
    
    
    1,249Restricted cash
    
    
    2
    
    
    
    1Accounts receivable, net
    
    
    484
    
    
    
    383Materials and supplies, net
    
    
    218
    
    
    
    187Prepaid expenses and other
    
    
    507
    
    
    
    351Total current assets
    
    
    3,886
    
    
    
    3,282Property and equipmentFlight equipment
    
    
    2,202
    
    
    
    1,965Ground property and equipment
    
    
    651
    
    
    
    579Less accumulated depreciation and amortization
    
    
    (689
    )
    
    
    (567
    )2,164
    
    
    
    1,977Equipment purchase deposits
    
    
    78
    
    
    
    48Total property and equipment
    
    
    2,242
    
    
    
    2,025Other assetsGoodwill
    
    
    619
    
    
    
    629Other intangibles, net
    
    
    495
    
    
    
    513Restricted cash
    
    
    449
    
    
    
    666Other assets, net
    
    
    211
    
    
    
    236Total other assets
    
    
    1,774
    
    
    
    2,044Total assets
    
    $
    7,902
    
    
    $
    7,351LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent maturities of debt and capital leases
    
    $
    93
    
    
    $
    95Accounts payable
    
    
    369
    
    
    
    436Payables to related parties, net
    
    
    1,102
    
    
    
    2,608Air traffic liability
    
    
    944
    
    
    
    847Accrued compensation and vacation
    
    
    206
    
    
    
    250Accrued taxes
    
    
    135
    
    
    
    180Other accrued expenses
    
    
    916
    
    
    
    851Total current liabilities
    
    
    3,765
    
    
    
    5,267Noncurrent liabilities and deferred creditsLong-term debt and capital leases, net of current maturities
    
    
    1,322
    
    
    
    1,583Deferred gains and credits
    
    
    177
    
    
    
    205Postretirement benefits other than pensions
    
    
    178
    
    
    
    183Employee benefit liabilities and other
    
    
    555
    
    
    
    578Total noncurrent liabilities and deferred credits
    
    
    2,232
    
    
    
    2,549Stockholders equityCommon stock, $1 par, 1,000 shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    1,845
    
    
    
    11Accumulated other comprehensive loss
    
    
    (38
    )
    
    
    Retained earnings (deficit)
    
    
    98
    
    
    
    (476
    )Total stockholders equity
    
    
    1,905
    
    
    
    (465
    )Total liabilities and stockholders equity
    
    $
    7,902
    
    
    $
    7,351
  26




---



##### Table of Contents



Nine Months Ended September 30,2007
    
    
    2006Net cash provided by operating activities
    
    $
    456
    
    
    $
    502Cash flows from investing activitiesPurchases of property and equipment
    
    
    (333
    )
    
    
    (131
    )Purchases of short-term investments
    
    
    (2,560
    )
    
    
    (1,685
    )Sales of short-term investments
    
    
    3,124
    
    
    
    975Decrease in long-term restricted cash
    
    
    217
    
    
    
    157Proceeds from disposition of assets
    
    
    4
    
    
    
    4Increase in equipment purchase deposits
    
    
    (30
    )
    
    
    (8
    )Net cash provided by (used for) investing activities
    
    
    422
    
    
    
    (688
    )Cash flows from financing activitiesRepayments of debt and capital lease obligations
    
    
    (93
    )
    
    
    (89
    )Proceeds from issuance of debt
    
    
    132
    
    
    
    48Net increase in payables to related parties
    
    
    
    
    
    
    262Net cash provided by financing activities
    
    
    39
    
    
    
    221Net increase in cash and cash equivalents
    
    
    917
    
    
    
    35Cash and cash equivalents at beginning of period
    
    
    1,111
    
    
    
    1,116Cash and cash equivalents at end of period
    
    $
    2,028
    
    
    $
    1,151Non-cash investing and financing activitiesRepayment of Barclays prepaid miles by parent
    
    $
    325
    
    
    $
    Contribution of US Airways Groups investment in America West Holdings to US Airways
    
    
    1,157
    
    
    
    Forgiveness of intercompany payable to US Airways Group
    
    
    1,833
    
    
    
    Unrealized loss on available for sale securities
    
    
    38
    
    
    
    Repayment of ATSB, Airbus, and GECC loans by parent
    
    
    
    
    
    
    981Loan proceeds received by parent
    
    
    
    
    
    
    64Notes payable cancelled under aircraft purchase agreement
    
    
    
    
    
    
    4Conversion of 7.5% Convertible Senior Notes, net of discount of $17 million, to
common stock of US Airways Group
    
    
    
    
    
    
    95Equipment purchases financed by capital leases
    
    
    
    
    
    
    3Supplemental informationCash paid for interest, net of amounts capitalized
    
    $
    106
    
    
    $
    150Cash paid for income taxes
    
    
    4
    
    
    
    6
  27




---



##### Table of Contents



US Airways, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 1. Basis of presentation
      Recent Accounting Pronouncements
  28




---



##### Table of Contents



29




---



##### Table of Contents



2. Special items, net
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Airbus restructuring (a)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (90
    )Merger related transition expenses (b)
    
    
    17
    
    
    
    27
    
    
    
    83
    
    
    
    108Special items, net
    
    $
    17
    
    
    $
    27
    
    
    $
    83
    
    
    $
    18
 
 (a)
    
    In connection with the merger and the Airbus Memorandum of Understanding (Airbus MOU)
executed between Airbus, US Airways Group, US Airways and AWA, certain aircraft firm orders
were restructured. In connection with that restructuring, US Airways Group and America West
Holdings were required to pay restructuring fees totaling $89 million by means of set-off
against existing equipment deposits of US Airways and AWA held by Airbus of $39 million and
$50 million, respectively. Also in connection with the Airbus MOU, US Airways and AWA entered
into two loan agreements with commitments of up to $161 million and $89 million. On March 31,
2006, the outstanding principal and accrued interest on the $89 million loan was forgiven upon
repayment in full of the $161 million loan in accordance with the terms of the Airbus loans.
As a result, US Airways recognized a gain associated with the return of these equipment
deposits upon forgiveness of the loan totaling $90 million, consisting of the $89 million in
equipment deposits and accrued interest of $1 million.(b)
    
    In connection with the continuing effort to consolidate functions and integrate organizations,
procedures, and operations with AWA, US Airways incurred $17 million of transition and merger
integration costs in the third quarter of 2007. These items included $1 million in training
and related expenses; $3 million in compensation expenses for equity awards granted in
connection with the merger; $5 million of aircraft livery costs; $7 million in professional
and technical fees related to the integration of the airline operations systems and $1 million
of other expenses. During the third quarter of 2006, US Airways incurred $27 million of
transition and merger integration costs. These items included $11 million in compensation
expenses primarily for severance, retention payments and equity awards granted in connection
with the merger; $1 million of aircraft livery costs; $13 million in professional and
technical fees, including continuing professional fees associated with US Airways bankruptcy
proceedings and fees related to the integration of the airline operations systems; $1 million
in employee moving expenses and $1 million of transition related sales and marketing program
expenses.In connection with the merger transition efforts noted above, US Airways incurred $83
million of transition and merger integration costs in the first nine months of 2007. These items
included $12 million in training and related expenses;
$16 million in compensation expenses for equity awards granted in connection with the merger; $15 million of aircraft livery costs; $30
million in professional and technical fees related to the integration of the airline operations
systems; $1 million in employee moving expenses; $4 million related to reservation system
migration expenses and $5 million of other expenses. During the first nine months of 2006, US
Airways incurred $108 million of transition and merger integration costs. These items included
$39 million in compensation expenses primarily for severance, retention payments and equity
awards granted in connection with the merger; $10 million of aircraft livery costs; $29 million
in professional and technical fees, including continuing professional fees associated with US
Airways bankruptcy proceedings and fees related to the integration of the airline operations
systems; $6 million in employee moving expenses; $11 million of net costs associated with the
integration of the AWA FlightFund and US Airways Dividend Miles frequent traveler programs; $9
million in merger related aircraft lease return expense; $2 million of transition related sales
and marketing program expenses; $1 million of programming service expenses and $1 million of
other expenses. 3. Stock options
 Agreements with ALPA 
 30




---



##### Table of Contents



Annual Incentive Grant 
   4. Debt
  September 30,
    
    
    December 31,2007
    
    
    2006SecuredEquipment notes payable, variable interest rates of 6.83% to 9.62%
    
    $
    1,322
    
    
    $
    1,258Slot financing, interest rate of 8%, installments due through 2015 (a)
    
    
    47
    
    
    
    47Capital lease obligations, interest rate of 8%, installments due through 2021 (b)
    
    
    41
    
    
    
    41Senior secured discount notes, variable interest rate of 8.58%, installments due 2005 through 2009 (c)
    
    
    33
    
    
    
    33GE Credit Facility (d)
    
    
    
    
    
    
    21Capital lease obligations, computer software, installments due through 2008
    
    
    2
    
    
    
    21,445
    
    
    
    1,402UnsecuredGE Engine Maintenance Term Note, variable interest rate of 9.37%, installments due 2008 through 2011
(e)
    
    
    55
    
    
    
    45Industrial development bonds, fixed interest rate of 6.3%, due 2023 (f)
    
    
    29
    
    
    
    29Barclays prepaid miles (formerly Juniper prepaid miles) (d)
    
    
    
    
    
    
    325Note payable to Pension Benefit Guaranty Corporation, interest rate of 6%, interest only payments
until due in 2012 (g)
    
    
    10
    
    
    
    1094
    
    
    
    409Total long-term debt and capital lease obligations
    
    
    1,539
    
    
    
    1,811Less: Unamortized discount on debt
    
    
    (124
    )
    
    
    (133
    )Current maturities
    
    
    (93
    )
    
    
    (95
    )Long-term debt and capital lease obligations, net of current maturities
    
    $
    1,322
    
    
    $
    1,583
 
 (a)
    
    In September 2005, US Airways entered into an agreement with Republic Airways to sell and
leaseback certain of its commuter slots at Ronald Reagan Washington National Airport and New
York LaGuardia Airport. US Airways continues to hold the right to repurchase the slots anytime
after the second anniversary of the slot sale-leaseback transaction. These transactions were
accounted for as secured financings. Installments are due monthly through 2015. In December
2006, Republic Airways and US Airways modified terms of the agreement to conform to subsequent
regulatory changes at LaGuardia, and the slots were returned to US Airways. The need for a
subsequent modification was fully contemplated in the original agreement. 31




---



##### Table of Contents



(b)
    
    Capital lease obligations consist principally of certain airport maintenance and facility
leases which expire in 2018 and 2021.
 (c)
    
    On December 27, 2004, AWA raised additional capital by financing its Phoenix maintenance
facility and flight training center. The flight training center was previously unencumbered,
and the maintenance facility became unencumbered earlier in 2004 when AWA refinanced its term
loan. Using its leasehold interest in these two facilities as collateral, AWA, through a
wholly owned subsidiary named FTCHP LLC, raised $31 million through the issuance of senior
secured discount notes. The notes were issued by FTCHP at a discount pursuant to the terms of
a senior secured term loan agreement among AWA, FTCHP, Heritage Bank SSB, as administrative
agent, Citibank, N.A., as the initial lender, and the other lenders from time to time party
thereto. Citibank, N.A. subsequently assigned all of its interests in the notes to third party
lenders.
    3 4
 (d)
    
    On March 23, 2007, US Airways Group entered into a new term loan credit facility with
Citicorp North America, Inc., as administrative agent, and a syndicate of lenders pursuant to
which US Airways Group borrowed an aggregate principal amount of $1.6 billion. US Airways is a
guarantor of the Citicorp credit facility.
  
    
    The amended and restated loan agreement, dated April 7, 2006, entered into by US Airways
Group with General Electric Capital Corporation (GECC) and a syndicate of lenders. At the
time of the repayment, the total outstanding balance of the loan was $1.25 billion.
    
    The Barclays prepaid miles issued on October 3, 2005 in connection with the amended
co-branded credit card agreement dated August 8, 2005 between pre-merger US Airways Group,
AWA and Juniper Bank, a subsidiary of Barclays PLC that has since been renamed Barclays Bank
Delaware (Barclays). At the time of the repayment, the total outstanding balance was $325
million.
    
    The credit facility with GECC, amended in July 2005 with an original balance of $28 million.
At the time of the repayment, the total outstanding balance of the loan was $19 million.
 (e)
    
    In December 2004, deferred charges under US Airways maintenance agreements with GE Engine
Systems, Inc. were converted into an unsecured term note. Interest on the note accrues at
LIBOR plus 4%, and becomes payable beginning in January 2008, at which time principal and
interest payments are due in 48 monthly installments.
 32




---



##### Table of Contents



(f)
    
    The industrial development revenue bonds are due April 2023. Interest at 6.3% is payable
semiannually on April 1 and October 1. The bonds are subject to optional redemption prior to
the maturity date on or after April 1, 2008, in whole or in part, on any interest payment date
at the following redemption prices: 102% on April 1 or October 1, 2008; 101% on April 1 or
October 1, 2009; and 100% on April 1, 2010 and thereafter.
 (g)
    
    In connection with US Airways Groups emergence from bankruptcy in September 2005, it reached
a settlement with the PBGC related to the termination of three of its defined benefit pension
plans. The settlement included the issuance of a $10 million note which matures in 2012 and
bears interest at 6% payable annually in arrears.
  2007
    
    $
    122008
    
    
    972009
    
    
    1262010
    
    
    1012011
    
    
    113Thereafter
    
    
    1,090$
    1,539
 5. Bankruptcy claims resolution
  6. Related party transactions
  September 30, 2007
    
    
    December 31, 2006US Airways Group
    
    $
    1,060
    
    
    $
    2,546US Airways Group wholly owned subsidiaries
    
    
    42
    
    
    
    62$
    1,102
    
    
    $
    2,608
   33




---



##### Table of Contents



7. Income taxes
        34




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Current provision:Federal
    
    $
    1
    
    
    $
    
    
    
    $
    4
    
    
    $
    5State
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    2Total current
    
    
    1
    
    
    
    2
    
    
    
    6
    
    
    
    7Deferred provision:Federal
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    54State
    
    
    4
    
    
    
    5
    
    
    
    10
    
    
    
    5Total deferred
    
    
    4
    
    
    
    59
    
    
    
    10
    
    
    
    59Provision for income taxes
    
    $
    5
    
    
    $
    61
    
    
    $
    16
    
    
    $
    66
  Nine Months EndedSeptember 30,2007
    
    
    2006Income tax expense at the federal statutory income tax rate
    
    $
    193
    
    
    $
    132Book expenses not deductible for tax
    
    
    12
    
    
    
    (6
    )State income tax expense, net of federal income tax expense
    
    
    24
    
    
    
    1Change in valuation allowance
    
    
    (209
    )
    
    
    (68
    )AMT provision
    
    
    4
    
    
    
    6Other, net
    
    
    (8
    )
    
    
    1Total
    
    $
    16
    
    
    $
    66
  September 30,
    
    
    December 31,2007
    
    
    2006Deferred tax assets:Net operating loss carryforwards
    
    $
    231
    
    
    $
    334Property, plant, and equipment
    
    
    20
    
    
    
    16Investments
    
    
    13
    
    
    
    3Aircraft leases
    
    
    
    
    
    
    11Financing transactions
    
    
    17
    
    
    
    Employee benefits
    
    
    305
    
    
    
    284Dividend Miles awards
    
    
    163
    
    
    
    205Restructuring reserve
    
    
    
    
    
    
    2AMT credit carryforward
    
    
    43
    
    
    
    37Other deferred tax assets
    
    
    13
    
    
    
    45Valuation allowance
    
    
    (98
    )
    
    
    (263
    )Net deferred tax assets
    
    
    707
    
    
    
    674Deferred tax liabilities:Depreciation and amortization
    
    
    467
    
    
    
    457Sale and leaseback transactions and deferred rent
    
    
    145
    
    
    
    126Leasing transactions
    
    
    32
    
    
    
    21Financing transactions
    
    
    
    
    
    
    41Long-lived intangibles
    
    
    18
    
    
    
    18Other deferred tax liabilities
    
    
    63
    
    
    
    30Total deferred tax liabilities
    
    
    725
    
    
    
    693Net deferred tax liabilities
    
    
    (18
    )
    
    
    (19
    )Less: current deferred tax liabilities
    
    
    
    
    
    
    Non-current deferred tax liabilities
    
    $
    (18
    )
    
    $
    (19
    )
  35




---



##### Table of Contents



8. Express expenses
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Aircraft fuel and related taxes
    
    $
    199
    
    
    $
    210
    
    
    $
    539
    
    
    $
    585Salaries and related costs
    
    
    4
    
    
    
    6
    
    
    
    15
    
    
    
    30Capacity purchases
    
    
    404
    
    
    
    392
    
    
    
    1,222
    
    
    
    1,157Aircraft rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Aircraft maintenance
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    4Other rent and landing fees
    
    
    23
    
    
    
    28
    
    
    
    70
    
    
    
    82Selling expenses
    
    
    39
    
    
    
    36
    
    
    
    119
    
    
    
    111Other expenses
    
    
    9
    
    
    
    10
    
    
    
    32
    
    
    
    42Express expenses
    
    $
    678
    
    
    $
    683
    
    
    $
    1,997
    
    
    $
    2,020
 9. Short-term investments
  September 30, 2007Estimated
    
    
    UnrealizedMarket Value
    
    
    gain (loss)Available for sale securities:Auction rate securities
    
    $
    373
    
    
    $
    (38
    )Held to maturity securities:Corporate bonds
    
    
    153
    
    
    
    n/aU.S. government sponsored enterprises
    
    
    82
    
    
    
    n/aCertificates of deposit
    
    
    20
    
    
    
    n/aMortgage and asset backed securities
    
    
    14
    
    
    
    n/aMunicipal bonds
    
    
    5
    
    
    
    n/aTotal held to maturity securities
    
    
    274
    
    
    
    n/aTotal short term investments
    
    $
    647
    
    
    $
    (38
    )
  36




---



##### Table of Contents



10. Other comprehensive income (loss), net
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    187
    
    
    $
    (62
    )
    
    $
    574
    
    
    $
    315Unrealized losses on available for sale securities
    
    
    (38
    )
    
    
    
    
    
    
    (38
    )
    
    
    Total comprehensive income (loss)
    
    $
    149
    
    
    $
    (62
    )
    
    $
    536
    
    
    $
    315
  11. Derivative instruments
   Put Option
    
    Call OptionHeating oil ($/gallon)
    
    $
    1.86
    
    
    $
    2.06Estimated crude oil equivalent ($/barrel)
    
    $
    64.66
    
    
    $
    73.06
     37




---



##### Table of Contents



12. Commitments and contingencies
 (a) Commitments to Purchase Flight Equipment and Maintenance Services
 Airbus Purchase Commitments
   
    
    An Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, which supersedes
the AWA A319/A320 Purchase Agreement. The terms of the amended and restated purchase
agreement encompass the purchase of 60 new narrow-body aircraft, including ten A319
aircraft, 40 A320 aircraft, and ten A321 aircraft, with conversion rights, in addition to
the 37 aircraft from the previous A319/A320 Purchase Agreement. Deliveries of the aircraft
under this agreement, including the 37 aircraft from the previous purchase agreement, will
run through 2012. US Airways expects to use the 60 A320 family aircraft to replace 60
older aircraft in the airlines fleet. The amended and restated purchase agreement also
provides US Airways with certain conversion rights, as well as purchase rights for the
acquisition of additional A320 family aircraft, subject to certain terms and conditions.
In addition, the amended and restated purchase agreement revises the delivery schedule for
15 A318 aircraft and provides US Airways with certain other rights with respect thereto.
    
    An Amended and Restated Airbus A350 XWB Purchase Agreement, which supersedes the A350
Purchase Agreement dated September 27, 2005 between US Airways Group, US Airways, AWA and
AVSA, S.A.R.L. (now Airbus S.A.S.). The new purchase agreement increases the number of firm
order aircraft from 20 A350 aircraft to 18 A350-800 XWB aircraft and four A350-900 XWB
aircraft, with the option to convert these aircraft to other A350 models, subject to
certain terms and conditions. Deliveries for the 22 A350 XWB aircraft will begin in 2014
and extend through 2017. US Airways expects to use these aircraft for modest international
expansion or replacement of existing older technology aircraft, as market conditions
warrant. The Amended and Restated Airbus A350 XWB Purchase Agreement also gives US Airways
purchase rights for the acquisition of additional A350 XWB aircraft, subject to certain
terms and conditions.
    
    An Airbus A330 Purchase Agreement which provides for the purchase by US Airways of ten
firm order A330-200 aircraft with deliveries in 2009 and 2010. US Airways expects to use
these aircraft to facilitate the retirement of its existing B767 fleet. The Airbus A330
Purchase Agreement also provides US Airways with purchase rights for the acquisition of
additional A330-200 aircraft, subject to certain terms and conditions.
     38




---



##### Table of Contents



Embraer Purchase Commitments
  Engine Purchase Commitments
  Engine Maintenance Commitments
  (b) Leases
  39




---



##### Table of Contents



2007
    
    $
    1902008
    
    
    1,0542009
    
    
    9722010
    
    
    8992011
    
    
    816Thereafter
    
    
    4,794Total minimum lease payments
    
    
    8,725Less sublease rental receipts
    
    
    (947
    )Total minimum lease payments
    
    $
    7,778
   (c) Off-Balance Sheet Arrangements
     40




---



##### Table of Contents



(d) Regional Jet Capacity Purchase Agreements
   (e) Guarantees and Indemnifications
       41




---



##### Table of Contents



(f) Concentration of Credit Risk
   42




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
   Recent Developments
 Single FAA Certification
   43




---



##### Table of Contents



Airbus Purchase Agreements
  Reduction in Pittsburgh Service
  44




---



##### Table of Contents



Airline Operations Update
  2007
    
    2006
    
    Percent Change 2007-2006July
    
    August
    
    September
    
    July
    
    August
    
    September
    
    July
    
    August
    
    SeptemberOn-time performance (a)
    
    
    66.3
    
    
    
    69.4
    
    
    
    80.1
    
    
    
    72.1
    
    
    
    75.7
    
    
    
    76.8
    
    
    
    (8.0
    )
    
    
    (8.3
    )
    
    
    4.3Completion factor (b)
    
    
    98.1
    
    
    
    98.4
    
    
    
    99.2
    
    
    
    98.7
    
    
    
    98.7
    
    
    
    98.8
    
    
    
    (0.6
    )
    
    
    (0.3
    )
    
    
    0.4Mishandled baggage (c)
    
    
    9.89
    
    
    
    9.61
    
    
    
    5.84
    
    
    
    8.56
    
    
    
    10.33
    
    
    
    8.93
    
    
    
    15.5
    
    
    
    (7.0
    )
    
    
    (34.6
    )Customer complaints (d)
    
    
    4.97
    
    
    
    4.42
    
    
    
    2.13
    
    
    
    1.94
    
    
    
    1.77
    
    
    
    0.98
    
    
    nm
        
    nm
    
    
    nm
 
 (a)
    
    Percentage of reported flight operations arriving on time as defined by the DOT.(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.   
    
    Being tentatively awarded by the DOT route authority to China. Daily service from the US
Airways hub in Philadelphia to Beijing, China will begin in 2009 with wide-body Airbus A340
aircraft configured to seat 269 passengers (42 Envoy and 227 economy).
    
    Broke ground for our new 72,000 square foot state-of-the-art operations control center
near Pittsburgh International Airport. The new facility will hold 600 employees, with
completion slated for early 2009.
    
    Successfully launched a mobile-device friendly version of usairways.com, allowing mobile
users almost all functionality of the full usairways.com.
    
    Signed a new codeshare agreement with Star Alliance member Air New Zealand, providing
non-stop flights available for US Airways customers to Auckland, New Zealand from San
Francisco and Los Angeles.
 45




---



##### Table of Contents



US Airways Groups Results of Operations
       46




---



##### Table of Contents



Three Months Ended
    
    Percent
    
    Nine Months Ended
    
    PercentSeptember 30,
    
    Change
    
    September 30,
    
    Change2007
    
    2006
    
    2007-2006
    
    2007
    
    2006
    
    2007-2006Revenue passenger miles (millions)
(a)
    
    
    16,395
    
    
    
    15,950
    
    
    
    2.8
    
    
    
    47,106
    
    
    
    46,058
    
    
    
    2.3Available seat miles (millions) (b)
    
    
    19,669
    
    
    
    20,156
    
    
    
    (2.4
    )
    
    
    57,748
    
    
    
    58,020
    
    
    
    (0.5
    )Load factor (c)
    
    
    83.4
    
    
    
    79.1
    
    
    4.3 pts
    
    
    81.6
    
    
    
    79.4
    
    
    2.2 ptsYield (d)
    
    
    13.01
    
    
    
    12.86
    
    
    
    1.2
    
    
    
    13.23
    
    
    
    13.13
    
    
    
    0.8Passenger revenue per available
seat mile (e)
    
    
    10.85
    
    
    
    10.18
    
    
    
    6.5
    
    
    
    10.79
    
    
    
    10.42
    
    
    
    3.6Cost per available seat mile (f)
    
    
    11.11
    
    
    
    11.40
    
    
    
    (2.6
    )
    
    
    11.07
    
    
    
    10.96
    
    
    
    1.1Passenger enplanements (thousands)
(g)
    
    
    14,962
    
    
    
    14,425
    
    
    
    3.7
    
    
    
    44,317
    
    
    
    43,189
    
    
    
    2.6Aircraft at end of period
    
    
    359
    
    
    
    357
    
    
    
    0.6
    
    
    
    359
    
    
    
    357
    
    
    
    0.6Block hours (h)
    
    
    340,146
    
    
    
    352,316
    
    
    
    (3.5
    )
    
    
    1,019,840
    
    
    
    1,025,598
    
    
    
    (0.6
    )Average stage length (miles) (i)
    
    
    945
    
    
    
    956
    
    
    
    (1.1
    )
    
    
    929
    
    
    
    933
    
    
    
    (0.5
    )Average passenger journey (miles)
(j)
    
    
    1,558
    
    
    
    1,576
    
    
    
    (1.1
    )
    
    
    1,505
    
    
    
    1,497
    
    
    
    0.5Gallons of aircraft fuel consumed
(millions)
    
    
    311.3
    
    
    
    318.5
    
    
    
    (2.3
    )
    
    
    909.8
    
    
    
    912.5
    
    
    
    (0.3
    )Average aircraft fuel price
including tax (per gallon)
    
    
    2.22
    
    
    
    2.26
    
    
    
    (1.6
    )
    
    
    2.09
    
    
    
    2.13
    
    
    
    (1.9
    )Full time equivalent employees at
end of period
    
    
    34,321
    
    
    
    33,252
    
    
    
    3.2
    
    
    
    34,321
    
    
    
    33,252
    
    
    
    3.2
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. A RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. An ASM represents one seat flown
one mile.(c)
    
    Load factor  The percentage of available seats that are filled with revenue passengers.(d)
    
    Yield  A measure of airline revenue derived by dividing passenger revenue by revenue
passenger miles and expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Total passenger revenues divided by
total available seat miles. 47




---



##### Table of Contents



(f)
    
    Cost per available seat mile (CASM)  Total mainline operating expenses divided by total
available seat miles.(g)
    
    Passenger enplanements -The number of passengers on board an aircraft including local,
connecting and through passengers.(h)
    
    Block hours  The hours measured from the moment an aircraft first moves under its own power,
including taxi time, for the purposes of flight until the aircraft is docked at the next point
of landing and its power is shut down.(i)
    
    Average stage length  The average of the distances flown on each segment of every route.(j)
    
    Average passenger journey  The average one-way trip measured in miles for one passenger
origination. Three Months Ended September 30, 2007
Compared with the
Three Months Ended September 30, 2006
 Revenues:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    2,133
    
    
    $
    2,052
    
    
    
    4.0Express passenger
    
    
    692
    
    
    
    703
    
    
    
    (1.5
    )Cargo
    
    
    32
    
    
    
    40
    
    
    
    (19.7
    )Other
    
    
    179
    
    
    
    173
    
    
    
    2.9Total operating revenues
    
    $
    3,036
    
    
    $
    2,968
    
    
    
    2.3
    48




---



##### Table of Contents



Operating Expenses:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    692
    
    
    $
    719
    
    
    
    (3.8
    )Loss (gain) on fuel hedging instruments, net:Realized
    
    
    (20
    )
    
    
    
    
    
    nmUnrealized
    
    
    (13
    )
    
    
    88
    
    
    nmSalaries and related costs
    
    
    555
    
    
    
    529
    
    
    
    5.1Aircraft rent
    
    
    182
    
    
    
    181
    
    
    
    0.7Aircraft maintenance
    
    
    144
    
    
    
    142
    
    
    
    1.4Other rent and landing fees
    
    
    141
    
    
    
    146
    
    
    
    (4.0
    )Selling expenses
    
    
    116
    
    
    
    120
    
    
    
    (3.4
    )Special items, net
    
    
    17
    
    
    
    27
    
    
    
    (36.7
    )Depreciation and amortization
    
    
    47
    
    
    
    42
    
    
    
    11.9Other
    
    
    324
    
    
    
    305
    
    
    
    7.0Total mainline operating expenses
    
    
    2,185
    
    
    
    2,299
    
    
    
    (5.0
    )Express expenses:Fuel
    
    
    199
    
    
    
    210
    
    
    
    (5.2
    )Other
    
    
    450
    
    
    
    443
    
    
    
    1.4Total operating expenses
    
    $
    2,834
    
    
    $
    2,952
    
    
    
    (4.0
    )
   Percent2007
    
    2006
    
    Change(In cents)Mainline:Aircraft fuel and related taxes
    
    
    3.52
    
    
    
    3.57
    
    
    
    (1.4
    )Loss (gain) on fuel hedging instruments, net
    
    
    (0.17
    )
    
    
    0.44
    
    
    nmSalaries and related costs
    
    
    2.82
    
    
    
    2.62
    
    
    
    7.7Aircraft rent
    
    
    0.93
    
    
    
    0.90
    
    
    
    3.2Aircraft maintenance
    
    
    0.73
    
    
    
    0.70
    
    
    
    3.9Other rent and landing fees
    
    
    0.72
    
    
    
    0.73
    
    
    
    (1.6
    )Selling expenses
    
    
    0.59
    
    
    
    0.60
    
    
    
    (1.0
    )Special items, net
    
    
    0.09
    
    
    
    0.13
    
    
    
    (35.2
    )Depreciation and amortization
    
    
    0.24
    
    
    
    0.21
    
    
    
    14.6Other
    
    
    1.64
    
    
    
    1.50
    
    
    
    9.311.11
    
    
    
    11.40
    
    
    
    (2.6
    )
  
    
    Loss (gain) on fuel hedging instruments, net per ASM fluctuated from a loss of 0.44 cents
in the third quarter of 2006 to a gain of 0.17 cents in the third quarter of 2007 as a
result of a period over period increase in the volume of barrels hedged during a period in
which the fair market value of the costless collar transactions increased.
    
    Salaries and related costs per ASM increased 7.7% due to a period over period increase in
headcount, principally in fleet and passenger service employees, as part of our initiative
to improve operational performance. Employee benefits related expenses increased in the
third quarter of 2007 as a result of higher medical claims costs and an increase in the
amount provided for employee profit sharing plans.
 49




---



##### Table of Contents




    
    Aircraft maintenance expense per ASM increased 3.9% due to the number of overhauls
performed on engines not subject to power by the hour (PBH) maintenance agreements as well
as an increase in aircraft repair orders over the prior period. This increase was offset in
part by a revision to an estimate of certain accrued PBH penalties in connection with an
amendment to a PBH agreement.
    
    Other operating expenses per ASM increased 9.3% primarily due
to higher passenger handling costs
incurred at airport stations as a result of our operational
dependability issues during the 2007
quarter, costs incurred in 2007 to implement our operational improvement
plan, and costs resulting from the addition of three new
European routes in 2007.
  Nonoperating Income (Expense):
 Percent2007
    
    
    2006
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    43
    
    
    $
    45
    
    
    
    (2.8
    )Interest expense, net
    
    
    (66
    )
    
    
    (74
    )
    
    
    (10.8
    )Other, net
    
    
    2
    
    
    
    (4
    )
    
    nmTotal nonoperating expense, net
    
    $
    (21
    )
    
    $
    (33
    )
    
    
    (34.9
    )
  Nine Months Ended September 30, 2007
Compared with the
Nine Months Ended September 30, 2006
 Revenues:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    6,233
    
    
    $
    6,048
    
    
    
    3.1Express passenger
    
    
    2,039
    
    
    
    2,095
    
    
    
    (2.7
    )Cargo
    
    
    102
    
    
    
    114
    
    
    
    (10.1
    )Other
    
    
    550
    
    
    
    514
    
    
    
    6.8Total operating revenues
    
    $
    8,924
    
    
    $
    8,771
    
    
    
    1.7
   50




---



##### Table of Contents



Operating Expenses:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    1,900
    
    
    $
    1,943
    
    
    
    (2.2
    )Loss (gain) on fuel hedging instruments, net:Realized
    
    
    17
    
    
    
    (12
    )
    
    nmUnrealized
    
    
    (128
    )
    
    
    44
    
    
    nmSalaries and related costs
    
    
    1,659
    
    
    
    1,574
    
    
    
    5.4Aircraft rent
    
    
    542
    
    
    
    546
    
    
    
    (0.7
    )Aircraft maintenance
    
    
    479
    
    
    
    432
    
    
    
    10.7Other rent and landing fees
    
    
    408
    
    
    
    432
    
    
    
    (5.6
    )Selling expenses
    
    
    347
    
    
    
    348
    
    
    
    (0.3
    )Special items, net
    
    
    83
    
    
    
    18
    
    
    nmDepreciation and amortization
    
    
    137
    
    
    
    132
    
    
    
    3.9Other
    
    
    952
    
    
    
    901
    
    
    
    5.4Total mainline operating expenses
    
    
    6,396
    
    
    
    6,358
    
    
    
    0.6Express expenses:Fuel
    
    
    539
    
    
    
    585
    
    
    
    (7.8
    )Other
    
    
    1,382
    
    
    
    1,345
    
    
    
    2.8Total operating expenses
    
    $
    8,317
    
    
    $
    8,288
    
    
    
    0.3
   Percent2007
    
    2006
    
    Change(In cents)Mainline:Aircraft fuel and related taxes
    
    
    3.29
    
    
    
    3.35
    
    
    
    (1.8
    )Loss (gain) on fuel hedging instruments, net
    
    
    (0.19
    )
    
    
    0.06
    
    
    nmSalaries and related costs
    
    
    2.87
    
    
    
    2.71
    
    
    
    5.9Aircraft rent
    
    
    0.94
    
    
    
    0.94
    
    
    
    Aircraft maintenance
    
    
    0.83
    
    
    
    0.75
    
    
    
    11.2Other rent and landing fees
    
    
    0.71
    
    
    
    0.74
    
    
    
    (5.2
    )Selling expenses
    
    
    0.60
    
    
    
    0.60
    
    
    
    Special items, net
    
    
    0.14
    
    
    
    0.03
    
    
    nmDepreciation and amortization
    
    
    0.24
    
    
    
    0.23
    
    
    
    4.4Other
    
    
    1.64
    
    
    
    1.55
    
    
    
    5.811.07
    
    
    
    10.96
    
    
    
    1.1
  
    
    Loss (gain) on fuel hedging instruments, net per ASM fluctuated from a loss of 0.06 cents
in the first nine months of 2006 to a gain of 0.19 cents in the first nine months of 2007 as a result of a period over period
increase in the volume of barrels hedged
 51




---



##### Table of Contents



during a period in which the fair market value of the
costless collar transactions increased.
    
    Salaries and related costs per ASM increased 5.9% due to an increase in headcount,
principally in fleet and passenger service employees, as part of our initiative to improve
operational performance, as well as increases in employee benefits as a result of higher
medical claims.
    
    Aircraft maintenance expense per ASM increased 11.2% due principally to an increase in
the number of overhauls performed on engines not subject to power by the hour maintenance
agreements as well as an increase in aircraft repair orders in the first nine months of 2007
compared to the first nine months of 2006.
    
    Other operating expense per ASM increased 5.8% primarily due
to higher passenger handling costs incurred
at airport stations as a result of our operational dependability
issues during 2007, costs incurred to implement our operational
improvement plan, and costs resulting from the addition of three new European routes in
2007.
  Nonoperating Income (Expense):
 Percent2007
    
    
    2006
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    131
    
    
    $
    111
    
    
    
    18.4Interest expense, net
    
    
    (206
    )
    
    
    (221
    )
    
    
    (7.0
    )Other, net
    
    
    (11
    )
    
    
    (14
    )
    
    
    (15.9
    )Total nonoperating expense, net
    
    $
    (86
    )
    
    $
    (124
    )
    
    
    (30.6
    )
   52




---



##### Table of Contents



US Airways Results of Operations
        53




---



##### Table of Contents



Three Months Ended
    
    Percent
    
    Nine Months Ended
    
    PercentSeptember 30,
    
    Change
    
    September 30,
    
    Change2007
    
    2006
    
    2007-2006
    
    2007
    
    2006
    
    2007-2006Revenue passenger miles (millions)
(a)
    
    
    16,395
    
    
    
    15,950
    
    
    
    2.8
    
    
    
    47,106
    
    
    
    46,058
    
    
    
    2.3Available seat miles (millions) (b)
    
    
    19,669
    
    
    
    20,156
    
    
    
    (2.4
    )
    
    
    57,748
    
    
    
    58,020
    
    
    
    (0.5
    )Load factor (c)
    
    
    83.4
    
    
    
    79.1
    
    
    4.3 pts
    
    
    81.6
    
    
    
    79.4
    
    
    2.2 ptsYield (d)
    
    
    13.01
    
    
    
    12.86
    
    
    
    1.2
    
    
    
    13.23
    
    
    
    13.13
    
    
    
    0.8Passenger revenue per available
seat mile (e)
    
    
    10.85
    
    
    
    10.18
    
    
    
    6.5
    
    
    
    10.79
    
    
    
    10.42
    
    
    
    3.6Aircraft at end of period
    
    
    359
    
    
    
    357
    
    
    
    0.6
    
    
    
    359
    
    
    
    357
    
    
    
    0.6
 
 (a)
    
    Revenue passenger mile (RPM)  A basic measure of sales volume. A RPM represents one
passenger flown one mile.(b)
    
    Available seat mile (ASM)  A basic measure of production. An ASM represents one seat flown
one mile.(c)
    
    Load factor  The percentage of available seats that are filled with revenue passengers.(d)
    
    Yield  A measure of airline revenue derived by dividing passenger revenue by revenue
passenger miles and expressed in cents per mile.(e)
    
    Passenger revenue per available seat mile (PRASM)  Total passenger revenues divided by
total available seat miles. Three Months Ended September 30, 2007
Compared with the
Three Months Ended September 30, 2006
 Revenues:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    2,133
    
    
    $
    2,052
    
    
    
    4.0Express passenger
    
    
    692
    
    
    
    703
    
    
    
    (1.5
    )Cargo
    
    
    32
    
    
    
    40
    
    
    
    (19.7
    )Other
    
    
    208
    
    
    
    211
    
    
    
    (2.0
    )Total operating revenues
    
    $
    3,065
    
    
    $
    3,006
    
    
    
    2.0
 54




---



##### Table of Contents



Operating Expenses:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    692
    
    
    $
    719
    
    
    
    (3.8
    )Loss (gain) on fuel hedging instruments, net:Realized
    
    
    (20
    )
    
    
    
    
    
    nmUnrealized
    
    
    (13
    )
    
    
    88
    
    
    nmSalaries and related costs
    
    
    555
    
    
    
    529
    
    
    
    5.1Aircraft rent
    
    
    182
    
    
    
    181
    
    
    
    0.7Aircraft maintenance
    
    
    144
    
    
    
    142
    
    
    
    1.4Other rent and landing fees
    
    
    141
    
    
    
    146
    
    
    
    (4.0
    )Selling expenses
    
    
    116
    
    
    
    120
    
    
    
    (3.4
    )Special items, net
    
    
    17
    
    
    
    27
    
    
    
    (36.7
    )Depreciation and amortization
    
    
    49
    
    
    
    44
    
    
    
    11.2Other
    
    
    322
    
    
    
    309
    
    
    
    4.4Total mainline operating expenses
    
    
    2,185
    
    
    
    2,305
    
    
    
    (5.2
    )Express expenses:Fuel
    
    
    199
    
    
    
    210
    
    
    
    (5.2
    )Other
    
    
    479
    
    
    
    473
    
    
    
    1.2Total operating expenses
    
    $
    2,863
    
    
    $
    2,988
    
    
    
    (4.2
    )
   
    
    Loss (gain) on fuel hedging instruments, net fluctuated from a loss of $88 million in the
third quarter of 2006 to a gain of $33 million in the third quarter of 2007 as a result of a
period over period increase in the volume of barrels hedged during a period in which the
fair market value of the costless collar transactions increased.
    
    Salaries and related costs increased 5.1% due to an increase in headcount, principally in
fleet and passenger service employees, as part of US Airways initiative to improve
operational performance. Employee benefits related expenses increased in the third quarter
of 2007 as a result of higher medical claims costs along with an increase in the amount
provided for employee profit sharing plans.
    
    Aircraft maintenance expense increased 1.4% due to the number of overhauls performed on
engines not subject to power by the
 55




---



##### Table of Contents



hour (PBH) maintenance agreements as well as an increase in aircraft repair orders over the
prior period. This increase was offset in part by a revision to an estimate of certain accrued
PBH penalties in connection with an amendment to a PBH maintenance agreement.
  Nonoperating Income (Expense):
 Percent2007
    
    
    2006
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    43
    
    
    $
    44
    
    
    
    (2.7
    )Interest expense, net
    
    
    (55
    )
    
    
    (65
    )
    
    
    (15.2
    )Other, net
    
    
    2
    
    
    
    2
    
    
    
    Total nonoperating expense, net
    
    $
    (10
    )
    
    $
    (19
    )
    
    
    (42.5
    )
  Nine Months Ended September 30, 2007
Compared with the
Nine Months Ended September 30, 2006
 Revenues:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating revenues:Mainline passenger
    
    $
    6,233
    
    
    $
    6,048
    
    
    
    3.1Express passenger
    
    
    2,039
    
    
    
    2,095
    
    
    
    (2.7
    )Cargo
    
    
    102
    
    
    
    114
    
    
    
    (10.1
    )Other
    
    
    637
    
    
    
    619
    
    
    
    2.7Total operating revenues
    
    $
    9,011
    
    
    $
    8,876
    
    
    
    1.5
    56




---



##### Table of Contents



Operating Expenses:
 Percent2007
    
    
    2006
    
    
    Change(In millions)Operating expenses:Aircraft fuel and related taxes
    
    $
    1,900
    
    
    $
    1,943
    
    
    (2.2)Loss (gain) on fuel hedging instruments, net:Realized
    
    
    17
    
    
    
    (12
    )
    
    nmUnrealized
    
    
    (128
    )
    
    
    44
    
    
    nmSalaries and related costs
    
    
    1,659
    
    
    
    1,574
    
    
    5.4Aircraft rent
    
    
    542
    
    
    
    546
    
    
    (0.7)Aircraft maintenance
    
    
    479
    
    
    
    432
    
    
    10.7Other rent and landing fees
    
    
    408
    
    
    
    432
    
    
    (5.6)Selling expenses
    
    
    347
    
    
    
    348
    
    
    (0.3)Special items, net
    
    
    83
    
    
    
    18
    
    
    nmDepreciation and amortization
    
    
    143
    
    
    
    138
    
    
    4.0Other
    
    
    937
    
    
    
    910
    
    
    2.9Total mainline operating expenses
    
    
    6,387
    
    
    
    6,373
    
    
    0.2Express expenses:Fuel
    
    
    539
    
    
    
    585
    
    
    (7.8)Other
    
    
    1,458
    
    
    
    1,435
    
    
    1.5Total operating expenses
    
    $
    8,384
    
    
    $
    8,393
    
    
    (0.1)
   
    
    Loss (gain) on fuel hedging instruments, net fluctuated from a loss of $32 million in the
first nine months of 2006 to a gain of $111 million in the first nine months of 2007 as a
result of a period over period increase in the volume of barrels hedged during a period in
which the fair market value of the costless collar transactions increased.
    
    Salaries and related costs increased 5.4% due to an increase in headcount, principally in
fleet and passenger service employees as part of US Airways initiative to improve
operational performance, as well as increases in employee benefits as a result of increased
medical claims.
    
    Aircraft maintenance expense per ASM increased 10.7% due principally to an increase in
the number of overhauls performed on engines not subject to power by the hour maintenance
agreements as well as an increase in aircraft repair orders in the first nine months of 2007
compared to the first nine months of 2006.
    
    Other rent and landing fees expense per ASM decreased 5.6% as a result of the merger due
principally to the closure of former US Airways facilities on the east coast and a reduction
of equipment rent due to IT synergies as well as the recognition of higher annual airport
operating expense rent credits in the 2007 period.
  57




---



##### Table of Contents



Nonoperating Income (Expense):
 Percent2007
    
    
    2006
    
    
    Change(In millions)Nonoperating income (expense):Interest income
    
    $
    131
    
    
    $
    111
    
    
    18.4Interest expense, net
    
    
    (174
    )
    
    
    (205
    )
    
    (14.8)Other, net
    
    
    6
    
    
    
    (9
    )
    
    nmTotal nonoperating expense, net
    
    $
    (37
    )
    
    $
    (103
    )
    
    (64.0)
  Liquidity and Capital Resources
 Sources and Uses of Cash
 US Airways Group
     58




---



##### Table of Contents



US Airways
     59




---



##### Table of Contents



Commitments
  Refinancing Transaction
   
    
    The amended and restated loan agreement, dated April 7, 2006, entered into by US Airways
Group with GECC and a syndicate of lenders. At the time of the repayment, the total
outstanding balance of the loan was $1.25 billion.
    
    The Barclays prepaid miles issued on October 3, 2005 in connection with the amended
co-branded credit card agreement dated August 8, 2005 between pre-merger US Airways Group,
AWA and Juniper Bank, a subsidiary of Barclays PLC that has since been renamed Barclays Bank
Delaware (Barclays). At the time of the repayment, the total outstanding balance was $325
million.
    
    The credit facility with GECC, amended in July 2005 with an original balance of $28
million. At the time of the repayment, the total outstanding balance of the loan was $19
million.
    60




---



##### Table of Contents



Embraer Purchase Commitments
  Airbus Purchase Commitments
  
    
    An Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, which supersedes
the AWA A319/A320 Purchase Agreement. The terms of the amended and restated purchase
agreement encompass the purchase of 60 new narrow-body aircraft, including ten A319
aircraft, 40 A320 aircraft, and ten A321 aircraft, with conversion rights, in addition to
the 37 aircraft from the previous A319/A320 Purchase Agreement. Deliveries of the aircraft
under this agreement, including the 37 aircraft from the previous purchase agreement, will
run through 2012. US Airways expects to use the 60 A320 family aircraft to replace 60
older aircraft in the airlines fleet. The amended and restated purchase agreement also
provides US Airways with certain conversion rights, as well as purchase rights for the
acquisition of additional A320 family aircraft, subject to certain terms and conditions.
In addition, the amended and restated purchase agreement revises the delivery schedule for
15 A318 aircraft and provides US Airways with certain other rights with respect thereto.
    
    An Amended and Restated Airbus A350 XWB Purchase Agreement, which supersedes the A350
Purchase Agreement dated September 27, 2005 between US Airways Group, US Airways, AWA and
AVSA, S.A.R.L. (now Airbus S.A.S.). The new purchase agreement increases the number of firm
order aircraft from 20 A350 aircraft to 18 A350-800 XWB aircraft and four A350-900 XWB
aircraft, with the option to convert these aircraft to other A350 models, subject to
certain terms and conditions. Deliveries for the 22 A350 XWB aircraft will begin in 2014
and extend through 2017. US Airways expects to use these aircraft for modest international
expansion or replacement of existing older technology aircraft, as market conditions
warrant. The Amended and Restated Airbus A350 XWB Purchase Agreement also gives US Airways
purchase rights for the acquisition of additional A350 XWB aircraft, subject to certain
terms and conditions.
    
    An Airbus A330 Purchase Agreement which provides for the purchase by US Airways of ten
firm order A330-200 aircraft with deliveries in 2009 and 2010. US Airways expects to use
these aircraft to facilitate the retirement of its existing B767 fleet. The Airbus A330
Purchase Agreement also provides US Airways with purchase rights for the acquisition of
additional A330-200 aircraft, subject to certain terms and conditions.
  61




---



##### Table of Contents



Asset Based Financings
   Affinity Credit Card Partner Agreement
     62




---



##### Table of Contents



Covenants and Credit Rating
   Off-Balance Sheet Arrangements
   63




---



##### Table of Contents



Other Indebtedness and Obligations
  Payments Due by Period2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalUS Airways Group (1)Debt (2)
    
    $
    
    
    
    $
    16
    
    
    $
    16
    
    
    $
    16
    
    
    $
    16
    
    
    $
    1,610
    
    
    $
    1,674Aircraft related and other commitments (3)
    
    
    100
    
    
    
    442
    
    
    
    40
    
    
    
    48
    
    
    
    239
    
    
    
    1,429
    
    
    
    2,298US Airways (4)Debt and capital lease obligations
    
    
    12
    
    
    
    97
    
    
    
    126
    
    
    
    101
    
    
    
    113
    
    
    
    1,090
    
    
    
    1,539Aircraft purchase and operating lease commitments (3)
    
    
    207
    
    
    
    1,367
    
    
    
    1,742
    
    
    
    1,379
    
    
    
    819
    
    
    
    4,800
    
    
    
    10,314Regional capacity purchase agreements (5)
    
    
    393
    
    
    
    1,724
    
    
    
    1,789
    
    
    
    1,825
    
    
    
    1,861
    
    
    
    7,564
    
    
    
    15,156Other US Airways Group subsidiaries (6)
    
    
    2
    
    
    
    10
    
    
    
    4
    
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    20Total
    
    $
    714
    
    
    $
    3,656
    
    
    $
    3,717
    
    
    $
    3,370
    
    
    $
    3,049
    
    
    $
    16,495
    
    
    $
    31,001
 
 (1)
    
    These commitments represent those specifically entered into by US Airways Group or joint
commitments entered into by US Airways Group and US Airways under which each entity is jointly
and severally liable.(2)
    
    Includes $74 million aggregate principal amount of 7% senior convertible notes due 2020
issued by US Airways Group and the $1.6 billion Citicorp credit facility due March 23, 2014.(3)
    
    Aircraft purchase commitments exclude the Airbus aircraft order announced in June 2007 as the
execution of a definitive purchase agreement was not completed until October 2007 and the
Rolls Royce engine order announced in June 2007 as the order is contingent upon execution of a
definitive purchase agreement.(4)
    
    Commitments listed separately under US Airways and its wholly owned subsidiaries represent
commitments under agreements entered into separately by those companies.(5)
    
    Represents minimum payments under capacity purchase agreements with third-party Express
carriers.(6)
    
    Represents operating lease commitments entered into by US Airways Groups other airline
subsidiaries Piedmont and PSA.  64




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
      65




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk Sensitive Instruments
  Commodity price risk
   Interest rate risk
   
 Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures.
  Changes in internal control over financial reporting.
  66




---



##### Table of Contents



Limitation on the effectiveness of controls.
  67




---



##### Table of Contents



Part II. Other Information
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
  Risk Factors Relating to the Company and Industry Related Risks
 Our business is dependent on the price and availability of aircraft fuel. Continued periods of
historically high fuel costs, significant disruptions in the supply of aircraft fuel or significant
further increases in fuel costs could have a significant negative impact on our operating results.
  68




---



##### Table of Contents



Our high level of fixed obligations limits our ability to fund general corporate requirements and
obtain additional financing, limits our flexibility in responding to competitive developments and
increases our vulnerability to adverse economic and industry conditions.
  
    
    A decrease in revenues results in a disproportionately greater percentage decrease in
earnings.
    
    We may not have sufficient liquidity to fund all of these fixed costs if our revenues
decline or costs increase.
    
    We may have to use our working capital to fund these fixed costs instead of funding
general corporate requirements, including capital expenditures.
    
    We may not have sufficient liquidity to respond to competitive developments and adverse
economic conditions.
 Our obligations also impact our ability to obtain additional financing, if needed, and our
flexibility in the conduct of our business. Our existing indebtedness is secured by substantially
all of our assets. Moreover, the terms of our Citicorp credit facility require us to maintain
consolidated unrestricted cash and cash equivalents of not less than $1.25 billion, with not less
than $750 million (subject to partial reductions upon certain reductions in the outstanding
principal amount of the loan) of that amount held in accounts subject to control agreements. Our
affinity credit card partner agreement with Barclays Bank Delaware, a subsidiary of Barclays PLC,
requires us to maintain an average quarterly balance of cash, cash equivalents and short-term
investments of at least $1 billion for the entirety of the agreement.Our ability to pay the fixed costs associated with our contractual obligations depends on our
operating performance and cash flow, which in turn depend on general economic and political
conditions. A failure to pay our fixed costs or a breach of the contractual obligations could
result in a variety of adverse consequences, including the acceleration of our indebtedness, the
withholding of credit card proceeds by the credit card servicers and the exercise of remedies by
our creditors and lessors. In such a situation, it is unlikely that we would be able to fulfill our
contractual obligations, repay the accelerated indebtedness, make required lease payments or
otherwise cover our fixed costs.
 Union disputes, employee strikes and other labor-related disruptions may adversely affect our
operations.
   We rely heavily on automated systems to operate our business and any failure of these systems, or
the failure to integrate them successfully following the merger, could harm our business.
  69




---



##### Table of Contents



We might not be able to fully realize the synergies generated by the merger.
  The integration of US Airways Group and America West Holdings following the merger continues to
present significant challenges.
  The inability to maintain labor costs at competitive levels could harm our financial performance.
   Our future growth is dependent on obtaining adequate operating facilities at airports throughout
our network.
  The travel industry continues to face ongoing security concerns.
  70




---



##### Table of Contents



Delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity may adversely
impact our operations and financial results.
  Fluctuations in interest rates could adversely affect our liquidity, operating expenses and
results.
  If we incur problems with any of our third party service providers, our operations could be
adversely affected by a resulting decline in revenue or negative public perception about our
services.
  Increases in insurance costs or reductions in insurance coverage may adversely impact our
operations and financial results.
  Changes in government regulation could increase our operating costs and limit our ability to
conduct our business.
  71




---



##### Table of Contents



Ongoing data security compliance requirements could increase our costs, and any significant data
breach could harm our business, financial condition or results of operations.
 
 The airline industry is intensely competitive.
   The loss of key personnel upon whom we depend to operate our business or the inability to attract
additional qualified personnel could adversely affect the results of our operations or our
financial performance.
  Interruptions or disruptions in service at one of our hub airports could have a material adverse
impact on our operations.
  72




---



##### Table of Contents



We are at risk of losses and adverse publicity stemming from any accident involving any of our
aircraft.
  Our business is subject to weather factors and seasonal variations in airline travel, which cause
our results to fluctuate.
  The use of America West Holdings and US Airways Groups respective pre-merger NOLs and certain
other tax attributes could be limited in the future.
  Bankruptcy-related changes to employee benefit plans could lead to protracted litigation.
  US Airways Group could experience significant operating losses in the future.
   73




---



##### Table of Contents



Risks Related to Our Common Stock
 Our common stock has limited trading history and its market price may be volatile.
  
    
    our operating results failing to meet the expectations of securities analysts or
investors;
    
    changes in financial estimates or recommendations by securities analysts;
    
    material announcements by us or our competitors;
    
    movements in fuel prices;
    
    new regulatory pronouncements and changes in regulatory guidelines;
    
    general and industry-specific economic conditions;
    
    public sales of a substantial number of shares of our common stock; and
    
    general market conditions.
 Conversion of our convertible notes will dilute the ownership interest of existing stockholders and
could adversely affect the market price of our common stock.
  Certain provisions of the amended and restated certificate of incorporation and amended and
restated bylaws of US Airways Group make it difficult for stockholders to change the composition of
our board of directors and may discourage takeover attempts that some of our stockholders might
consider beneficial.
  
    
    a classified board of directors with three-year staggered terms;
    
    advance notice procedures for stockholder proposals to be considered at stockholders
meetings;
    
    the ability of US Airways Groups board of directors to fill vacancies on the board;
    
    a prohibition against stockholders taking action by written consent;
    
    a prohibition against stockholders calling special meetings of stockholders;
    
    a requirement that holders of at least 80% of the voting power of the shares entitled to
vote in the election of directors approve amendment of the amended and restated bylaws; and
    
    super-majority voting requirements to modify or amend specified provisions of US Airways
Groups amended and restated certificate of incorporation.
 74




---



##### Table of Contents



Our charter documents include provisions limiting voting and ownership by foreign owners.
  75




---



##### Table of Contents



Item 6. Exhibits
 Exhibit No.
    
    Description10.1
    
    Amendment No. 17 dated as of July 30, 2007 to the A319/A320 Purchase Agreement dated as
of September 12, 1997 between AVSA, S.A.R.L. and America West Airlines, Inc.*10.2
    
    Amendment No. 3 dated as of August 15, 2007 to Amended and Restated Embraer Aircraft
Purchase Agreement dated as of June 13, 2006 between US Airways Group and Embraer 
Empresa Brasileira de Aeronautica S.A.*10.3
    
    Amendment No. 1 dated as of August 15, 2007 to Amended and Restated Letter Agreement
DCT-022/33 dated as of June 13, 2006 between US Airways Group and Embraer  Empresa
Brasileira de Aeronautica S.A.*10.4
    
    Summary of Director Compensation and Benefits31.1
    
    Certification of US Airways Groups Chief Executive Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of US Airways Groups Chief Financial Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.31.3
    
    Certification of US Airways Chief Executive Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934, as amended.31.4
    
    Certification of US Airways Chief Financial Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934, as amended.32.1
    
    Certification of US Airways Groups Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of US Airways Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Portions of this exhibit have been omitted under a request for confidential treatment and
filed separately with the Securities and Exchange Commission.
    
    Management contract or compensatory plan or arrangement. 76




---



##### Table of Contents



Signatures
  US Airways Group, Inc. (Registrant)Date: October 25, 2007
    By:
    /s/ Derek J. KerrDerek J. KerrSenior Vice President and
Chief Financial Officer US Airways, Inc. (Registrant)Date: October 25, 2007
    By:
    /s/ Derek J. KerrDerek J. KerrSenior Vice President and
Chief Financial Officer 77




---



##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description10.1
    
    Amendment No. 17 dated as of July 30, 2007 to the A319/A320 Purchase Agreement
dated as of September 12, 1997 between AVSA, S.A.R.L. and America West Airlines,
Inc.*10.2
    
    Amendment No. 3 dated as of August 15, 2007 to Amended and Restated Embraer
Aircraft Purchase Agreement dated as of June 13, 2006 between US Airways Group and
Embraer  Empresa Brasileira de Aeronautica S.A.*10.3
    
    Amendment No. 1 dated as of August 15, 2007 to Amended and Restated Letter
Agreement DCT-022/33 dated as of June 13, 2006 between US Airways Group and Embraer
 Empresa Brasileira de Aeronautica S.A.*10.4
    
    Summary of Director Compensation and Benefits31.1
    
    Certification of US Airways Groups Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of US Airways Groups Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as amended.31.3
    
    Certification of US Airways Chief Executive Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.31.4
    
    Certification of US Airways Chief Financial Officer pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934, as amended.32.1
    
    Certification of US Airways Groups Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of US Airways Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Portions of this exhibit have been omitted under a request for confidential treatment and
filed separately with the Securities and Exchange Commission.
    
    Management contract or compensatory plan or arrangement. 78