<PAGE>
                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                  Form 10-Q

           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
              For the quarterly period ended September 30, 1996

                              USAir Group, Inc.
                       (Commission file number: 1-8444)
                                     and
                                 USAir, Inc.
                       (Commission file number: 1-8442)
         (Exact names of registrants as specified in their charters)

   Delaware                   USAir Group, Inc.             54-1194634
(State of incorporation         USAir, Inc.                 53-0218143
   of both registrants)               (I.R.S. Employer Identification Numbers)

                              USAir Group, Inc.
                2345 Crystal Drive, Arlington, Virginia  22227
                   (Address of principal executive offices)
                                (703) 418-5306
             (Registrant's telephone number, including area code)

                                 USAir, Inc.
                2345 Crystal Drive, Arlington, Virginia  22227
                   (Address of principal executive offices)
                                (703) 418-7000
             (Registrant's telephone number, including area code)

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

                   Yes   [X]                   No  [ ]

     At  October  31,  1996,  there  were outstanding approximately 64,180,000
shares  of  common stock of USAir Group, Inc. and 1,000 shares of common stock
of  USAir,  Inc.

     The  registrant  USAir,  Inc.  meets  the conditions set forth in General
Instructions  H(1)(a)  and  (b) of Form 10-Q and is therefore participating in
the  filing  of  this  form  with  the  reduced  disclosure  format.

<PAGE>
                              USAir Group, Inc.
                                     and
                                 USAir, Inc.

                        Quarterly Report on Form 10-Q

                              Table of Contents

<TABLE>
<CAPTION>



Part I. Financial Information                               Page
                                                            ----
<S>                                                         <C>

 Item 1A.  Financial Statements - USAir Group, Inc.

   Condensed Consolidated Statements of Operations
     -- Three Months and Nine Months Ended September 30,
        1996 and 1995                                          1
   Condensed Consolidated Balance Sheets
     -- September 30, 1996 and December 31, 1995               2
   Condensed Consolidated Statements of Cash Flows
     -- Nine Months Ended September 30, 1996 and 1995          4
   Notes to Condensed Consolidated Financial Statements        6

 Item 1B.  Financial Statements - USAir, Inc.

   Condensed Consolidated Statements of Operations
     -- Three Months and Nine Months Ended September 30,
        1996 and 1995                                         11
   Condensed Consolidated Balance Sheets
     -- September 30, 1996 and December 31, 1995              12
   Condensed Consolidated Statements of Cash Flows
     -- Nine Months Ended September 30, 1996 and 1995         14
   Notes to Condensed Consolidated Financial Statements       16

 Item 2. Management's Discussion and Analysis of Financial    18
          Condition and Results of Operations

Part II.  Other Information

 Item 1.  Legal Proceedings                                   34

 Item 3.  Defaults Upon Senior Securities                     34

 Item 5.  Other Information                                   35

 Item 6.  Exhibits and Reports on Form 8-K                    35

Signatures                                                    37
</TABLE>



<PAGE>
                        Part 1.  Financial Information
                        Item 1A.  Financial Statements
<TABLE>
<CAPTION>

USAir Group, Inc.
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended September 30, 1996 and 1995 (unaudited)
--------------------------------------------------------------------------
(in thousands, except per share amounts)
                                                  Three Months Ended               Nine Months Ended
                                                     September 30,                    September 30,
                                                  ------------------               -----------------

                                                   1996           1995           1996           1995
                                               -------------  -------------  -------------  -------------
<S>                                            <C>            <C>            <C>            <C>
Operating Revenues
     Passenger transportation                  $  1,885,792   $  1,687,824   $  5,520,502   $  5,078,439 
     Cargo and freight                               39,701         37,889        117,944        118,306 
     Other                                          147,074        147,704        452,030        423,063 
                                               -------------  -------------  -------------  -------------
          Total Operating Revenues                2,072,567      1,873,417      6,090,476      5,619,808 
Operating Expenses
     Personnel costs                                810,282        730,145      2,351,826      2,179,066 
     Aviation fuel                                  188,321        154,223        532,394        477,666 
     Commissions                                    147,088        135,400        440,225        431,222 
     Aircraft rent                                  116,378        108,718        321,641        329,738 
     Other rent and landing fees                    105,839        105,308        311,539        310,506 
     Aircraft maintenance                            75,446         83,287        265,903        264,928 
     Depreciation and amortization                   77,411         87,912        238,072        263,978 
     Other, net                                     420,450        375,775      1,240,793      1,148,937 
                                               -------------  -------------  -------------  -------------
          Total Operating Expenses                1,941,215      1,780,768      5,702,393      5,406,041 
                                               -------------  -------------  -------------  -------------
          Operating Income (Loss)                   131,352         92,649        388,083        213,767 
Other Income (Expense)
     Interest income                                 21,732         13,562         51,409         32,553 
     Interest expense                               (66,456)       (75,065)      (201,409)      (228,521)
     Interest capitalized                             2,280            758          5,702          7,730 
     Equity in earnings (loss) of affiliates          9,791          9,234         31,102         27,781 
     Other, net                                     (19,486)         8,332        (20,091)        12,137 
                                               -------------  -------------  -------------  -------------
          Other Income (Expense), Net               (52,139)       (43,179)      (133,287)      (148,320)
                                               -------------  -------------  -------------  -------------
Income (Loss) Before Taxes                           79,213         49,470        254,796         65,447 
Provision (Credit) for Income Taxes                  11,475          6,414         18,576          6,414 
                                               -------------  -------------  -------------  -------------
Net Income (Loss)                                    67,738         43,056        236,220         59,033 
Preferred Dividend Requirement                      (22,338)       (21,415)       (67,134)       (63,044)
                                               -------------  -------------  -------------  -------------
Net Income (Loss) Applicable  to
     Common Stockholders                       $     45,400   $     21,641   $    169,086   $     (4,011)
                                               =============  =============  =============  =============
Income (Loss) per Common Share
     Primary                                   $       0.69   $       0.35   $       2.58   $      (0.06)
     Fully-diluted                             $       0.60            N/A   $       2.15            N/A
Shares Used for Computation (000)
     Primary                                         65,838         62,571         65,457         62,143 
     Fully-diluted                                   95,754            N/A         95,373            N/A

<FN>

See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
                                      1

<PAGE>
<TABLE>
<CAPTION>

USAir Group, Inc.
Condensed Consolidated Balance Sheets
September 30, 1996 (unaudited) and December 31, 1995
----------------------------------------------------
(dollars in thousands, except per share amounts)


                                                           September 30,    December 31,
                                                               1996             1995
                                                          ---------------  --------------
<S>                                                       <C>              <C>
                           ASSETS
Current Assets
     Cash and cash equivalents                            $      655,447   $     881,854 
     Short-term investments                                      631,114          19,831 
     Receivables, net                                            410,293         322,122 
     Materials and supplies, net                                 250,600         248,144 
     Prepaid expenses and other                                  138,035         111,131 
                                                          ---------------  --------------
          Total current assets                                 2,085,489       1,583,082 

Property and Equipment
     Flight equipment                                          5,275,700       5,251,742 
     Ground property and equipment                             1,091,620       1,073,720 
     Less accumulated depreciation and amortization           (2,464,773)     (2,301,059)
                                                          ---------------  --------------
                                                               3,902,547       4,024,403 
     Purchase deposits                                            64,261          17,026 
                                                          ---------------  --------------
          Property and equipment, net                          3,966,808       4,041,429 
Other Assets
     Goodwill, net                                               498,524         510,562 
     Other intangibles, net                                      302,389         312,786 
     Other assets, net                                           518,618         507,149 
                                                          ---------------  --------------
          Total other assets                                   1,319,531       1,330,497 
                                                          ---------------  --------------

                                                          $    7,371,828   $   6,955,008 
                                                          ===============  ==============

     LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
     Current maturities of long-term debt                 $       94,727   $      80,721 
     Accounts payable                                            380,546         325,330 
     Traffic balances payable and unused tickets                 844,353         607,170 
     Accrued expenses                                          1,421,787       1,471,475 
                                                          ---------------  --------------
          Total current liabilities                            2,741,413       2,484,696 
Long-term Debt, Net of Current Maturities                      2,625,790       2,717,085 
Deferred Credits and Other Liabilities
     Deferred gains, net                                         366,555         386,947 
     Postretirement benefits other than pensions,
          non-current                                          1,076,688       1,015,623 
     Non-current employee benefit liabilities and other          464,070         427,726 
                                                          ---------------  --------------
          Total deferred credits and other liabilities         1,907,313       1,830,296 
</TABLE>
                           (continued on next page)

                                      2

<PAGE>
<TABLE>
<CAPTION>

USAir Group, Inc.
Condensed Consolidated Balance Sheets
September 30, 1996 (unaudited) and December 31, 1995   (Continued)
------------------------------------------------------------------
(dollars in thousands, except per share amounts)


                                                            September 30,    December 31,
                                                                1996             1995
                                                           ---------------  --------------
<S>                                                        <C>              <C>
  LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

Commitments and Contingencies

Redeemable Cumulative Convertible Preferred Stock
     Series A, 358,000 shares issued, no par value                358,000         358,000 
          (redemption value of $417,181 at September 30,
          1996)
     Series F, 30,000 shares issued, no par value                 300,000         300,000 
          (redemption value of $331,429 at September 30,
          1996)
     Series T, 10,000 shares issued, no par value                 100,719         100,719 
          (redemption value of $110,044 at September 30,
          1996)
Stockholders' Equity (Deficit)
     Series B cumulative convertible preferred stock,
          no par value, 4,263,000 depositary shares               213,153         213,153 
          issued (liquidation preference of $250,455 at
          September 30, 1996)
Common stock, par value $1 per share, authorized
     150,000,000 shares, issued and outstanding                    64,216          63,449 
     64,216,000 and  63,449,000 shares, respectively
Paid-in capital                                                 1,385,139       1,362,756 
Retained earnings (deficit)                                    (2,144,991)     (2,298,211)
Deferred compensation                                            (100,929)        (98,847)
Adjustment for minimum pension liability                          (77,995)        (78,088)
                                                           ---------------  --------------
          Total stockholders' equity (deficit)                   (661,407)       (835,788)
                                                           ---------------  --------------

                                                           $    7,371,828   $   6,955,008 
                                                           ===============  ==============



<FN>

See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
                                      3

<PAGE>
<TABLE>
<CAPTION>

USAir Group, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 (unaudited)
---------------------------------------------------------
(in thousands)
                                                                Nine Months Ended September 30,
                                                                -------------------------------
                                                                        1996        1995
                                                                     ----------  ----------

<S>                                                                  <C>         <C>
Cash and cash equivalents beginning of period                        $ 881,854   $ 429,538 
                                                                     ----------  ----------

Cash flows from operating activities
     Net income (loss)                                                 236,220      59,033 
     Adjustments to reconcile net income (loss) to
        cash provided by (used for) operating activities
          Depreciation and amortization                                238,072     263,978 
          Loss (gain) on disposition of property                          (889)    (13,762)
          Amortization of deferred gains and credits                   (20,749)    (20,704)
          Other                                                         42,560      (2,847)
          Changes in certain assets and liabilities
               Decrease (increase) in receivables                      (88,171)   (130,595)
               Decrease (increase) in materials, supplies,
                    prepaid expenses and intangible pension assets     (42,453)    (12,221)
               Increase (decrease) in traffic balances
                    payable and unused tickets                         237,183     204,348 
               Increase (decrease) in accounts payable
                    and accrued expenses                                 4,762      72,086 
               Increase (decrease) in postretirement
                  benefits other than pensions, non-current             61,065      55,455 
                                                                     ----------  ----------
                    Net cash provided by (used for)
                         operating activities                          667,600     474,771 

Cash flows from investing activities
     Aircraft acquisitions and purchase deposits, net                  (37,231)    (49,675)
     Additions to other property                                      (105,711)    (55,561)
     Proceeds from disposition of property                              15,503     154,174 
     Change in short-term investments                                 (603,983)     21,994 
     Change in restricted cash and investments                          (2,347)        330 
     Other                                                             (10,821)     (1,421)
                                                                     ----------  ----------
          Net cash provided by (used for) investing
               activities                                             (744,590)     69,841 
</TABLE>

                           (continued on next page)
                                      4

<PAGE>
<TABLE>
<CAPTION>

USAir Group, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 (unaudited)    (Continued)
------------------------------------------------------------------------
(in thousands)
                                                       Nine Months Ended September 30,
                                                       -------------------------------
                                                            1996             1995
                                                      ----------------  ---------------

<S>                                                   <C>               <C>
Cash flows from financing activities
     Issuance of debt                                         103,002            1,162 
     Reduction of debt                                       (211,942)        (118,174)
     Issuance of common stock                                   2,523            8,315 
     Dividends paid                                           (43,000)               - 
                                                      ----------------  ---------------
          Net cash provided by (used for) financing
               activities                                    (149,417)        (108,697)
                                                      ----------------  ---------------

Net increase (decrease) in cash and cash equivalents         (226,407)         435,915 
                                                      ----------------  ---------------

Cash and cash equivalents end of period               $       655,447   $      865,453 
                                                      ================  ===============

Noncash investing and financing activities
     Issuance of debt - refinancing of debt secured
          by aircraft                                 $       159,998   $            - 
                                                      ================  ===============
     Reduction of debt - refinancing of debt
          secured by aircraft                         $       154,422   $            - 
                                                      ================  ===============
     Issuance of debt - aircraft acquisitions         $        26,075   $      162,125 
                                                      ================  ===============
     Reduction of debt - aircraft purchase deposits   $             -   $       70,837 
                                                      ================  ===============
     Underwriter's fees - refinancing of debt
          secured by aircraft                         $         2,488   $            - 
                                                      ================  ===============
     Dividends declared, but not paid                 $        40,000   $            - 
                                                      ================  ===============
Supplemental Information
     Cash paid during the year for interest, net
          of amounts capitalized                      $       219,270   $      243,410 
                                                      ================  ===============
     Net cash (received) paid during the year
          for income taxes                            $         7,254   $        4,609 
                                                      ================  ===============




<FN>

See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
                                      5

<PAGE>
                              USAir Group, Inc.
             Notes to Condensed Consolidated Financial Statements
                                 (Unaudited)

(1) Basis of Presentation

     The  accompanying Condensed Consolidated Financial Statements include the
accounts  of  USAir  Group,  Inc.  ("USAir  Group"  or  the "Company") and its
wholly-owned  subsidiaries USAir, Inc. ("USAir"), Piedmont Airlines, Inc., PSA
Airlines,  Inc.  (formerly  Jetstream International Airlines, Inc.), Allegheny
Airlines,  Inc. (formerly Pennsylvania Commuter Airlines, Inc.), USAir Leasing
and  Services,  Inc.,  USAir Fuel Corporation, Material Services Company, Inc.
and  The  OR  Group,  Inc.  (the  "OR  Group").  USAir's  accounts include its
wholly-owned  subsidiary  USAM  Corp.  ("USAM").

     The  OR  Group  was  incorporated  in February 1996 and is a wholly-owned
subsidiary  of  USAir  Group.  The  OR  Group  provides  resource  allocation
consulting  services  and  decision-making  support systems to USAir, which is
currently  OR  Group's  only  customer.

     USAir  has  announced  that  it  will  terminate  its  Airline  Technical
Services,  LLC  joint  venture  with  a  subsidiary  of  British  Airways Plc,
effective  January  1997.  Airline Technical Services, LLC, a Delaware limited
liability  company,  was  formed  during  the  fourth  quarter of 1995 for the
purpose  of offering joint aviation maintenance, and technical and engineering
expertise  in the Americas.  Amounts related to this joint venture included in
the  Company's  financial  results  for  the  first  nine  months  of 1996 are
immaterial  and  no  material  charges  are  expected  to  result  from  its
termination.

     Management  believes  that all adjustments necessary for a fair statement
of  results  have  been  included  in  the  Condensed  Consolidated  Financial
Statements  for  the  interim  periods  presented,  which  are  unaudited. All
significant  intercompany  accounts and transactions have been eliminated. The
preparation  of  financial  statements  in  conformity with generally accepted
accounting  principles  requires  management to make estimates and assumptions
that  affect  the reported amounts of assets and liabilities and disclosure of
contingent  assets and liabilities at the date of the financial statements and
the  reported  amounts  of  revenues and expenses during the reporting period.
Actual  results  could  differ  from  those  estimates.

     Certain  1995  amounts  have  been  reclassified  to  conform  with  1996
classifications.

     These  interim  period Condensed Consolidated Financial Statements should
be read in conjunction with the Consolidated Financial Statements contained in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.

(2) Income  (Loss)  Per  Common  Share

     The  Company  includes the effects of assuming conversion of all dilutive
stock  options  and  convertible  equity  instruments  into  common stock when
calculating  fully-diluted income (loss) per common share. For the three month
period  ended  September  30,  1996,  approximately  1,625,000

                                      6
<PAGE>
incremental  shares were included in the calculation as the result of applying
the  treasury stock method to the Company's outstanding stock options. For the
same  period,  the  effects  of  assuming conversion of the Company's Series F
Cumulative  Convertible  Senior  Preferred Stock ("Series F Preferred Stock"),
Series T-1 Cumulative Convertible Exchangeable Senior Preferred Stock ("Series
T-1  Preferred  Stock"), Series T-2 Cumulative Convertible Exchangeable Senior
Preferred  Stock ("Series T-2 Preferred Stock") (the Series T-1 and Series T-2
Preferred  Stock  are  collectively  referred  to  as  the "Series T Preferred
Stock"),  and  the  Series B Cumulative Convertible Preferred Stock ("Series B
Preferred Stock") were dilutive and therefore included in the calculation. The
income  and  share  effects  of  assuming  conversion of these preferred stock
issuances  were  approximately $12,144,000 and 29,916,000 shares.  The effects
of  assuming  conversion  of the Company's 9 % Series A Cumulative Convertible
Redeemable  Preferred Stock ("Series A Preferred Stock") were antidilutive and
therefore  excluded  from  the  calculation.

     For  the  nine  month  period  ended  September  30,  1996, approximately
1,510,000 incremental shares were included in the calculation as the result of
applying the treasury stock method to the Company's outstanding stock options.
For  the  same  period,  the  effects  of assuming conversion of the Series F,
Series  T and Series B Preferred Stock were dilutive and therefore included in
the  calculation. The total income and share effects of the dilutive preferred
stock  issuances  were  approximately  $36,404,000  and 29,916,000 shares. The
effects  of  assuming  conversion  of  the  Series  A  Preferred  Stock  were
antidilutive  and  therefore  excluded  from  the  calculation.

(3) Redeemable  Preferred  Stock

     On  October  25, 1996, the Company paid dividends of $40.0 million on its
outstanding  Series A, Series F and Series T Preferred Stock (collectively the
Company's "Senior Preferred Stock").  The Company also paid dividends of $43.0
million  on  its  Senior  Preferred  Stock  during August 1996.  Prior to the 
August  1996 payment, the Company had deferred the payment of dividends on all
of  its outstanding preferred stock issuances effective with dividend payments
due  September  30,  1994.

     The  Company's capital surplus as of September 30, 1996, as calculated in
accordance  with  Delaware  General  Corporation  Law  based  on the Company's
Condensed  Consolidated Balance Sheets, was $33.1 million. This surplus amount
includes  the  effect of the October dividend payment, which was accrued as of
September  30,  1996.  The  Company's  outstanding Series B Preferred Stock is
junior  to the Company's Senior Preferred Stock and is not eligible to receive
dividends  until the deferred dividends on the Senior Preferred Stock are paid
in  full  and  all Senior Preferred Stock dividend payments are current. There
can  be  no  assurance  of  when  or  if the Company's Board of Directors will
declare  additional  dividends  on  the  Company's  outstanding capital stock.

     After the October dividend payment, accumulated deferred dividends on all
of  the  Company's  outstanding  preferred  stock issuances, including penalty
dividends  thereon,  totaled  approximately  $97.9  million.

                                      7


<PAGE>
(4) Stockholders'  Equity

     On  May  22,  1996,  the  Company's  stockholders approved the 1996 Stock
Incentive Plan ("1996 Plan") and the Nonemployee Director Stock Incentive Plan
("Director Plan").  With the approval of the 1996 Plan, 3.1 million additional
shares  of  USAir  Group Common Stock ("Common Stock") were authorized for the
granting  of  stock  options  and/or restricted stock. In conjunction with the
1996  Plan,  2,745,000 additional shares of Common Stock were reserved for the
granting  of  stock  options and/or restricted stock as of September 30, 1996.

     With  the  approval  of  the Director Plan, 70,000 shares of Common Stock
were  authorized for the granting of stock options to nonemployee directors of
USAir  Group.  As  of  September  30, 1996, 15,000 shares of Common Stock were
reserved  for  the  granting  of  stock  options  under  the  Director  Plan.

(5) Amendment  of  the  1992  Stock  Option  Plan

     In  September  1996, the Human Resources Committee of the Company's Board
of  Directors  amended  the 1992 Stock Option Plan ("1992 Plan") to permit the
granting  of  stock  appreciation  rights  ("SARs") in tandem with the options
under  this  plan.  The Committee further amended the 1992 Plan to include the
grant  to  all  option  holders  of  one  SAR for each outstanding option held
effective  November  1,  1996. For each SAR, the holder is entitled to receive
the  difference between the fair market value of a share of USAir Group Common
Stock  and $15. The exercise of any SAR cancels its tandem option. Conversely,
the  exercise  of  any  option  cancels its tandem SAR. The SARs have the same
expiration  date  as  the  tandem  options.

(6) Nonemployee  Director  Retirement  Plan

     The  Retirement  Plan  for  Outside  Directors  of  USAir Group, Inc. was
terminated  as  of  December  31,  1995.  Pursuant to such termination, (i) no
individual  who  first  becomes  a director on or after December 31, 1995 will
participate  in the retirement plan and (ii) directors as of December 31, 1995
will  be credited with units of phantom stock of the Company  ("deferred stock
units"  or  "DSUs")  equal  in  value  to  the  present value of their accrued
benefits  as  of  December 31, 1995 based on the average price of the stock in
the  month  of  December  1995.   Such DSUs will be paid in cash following the
director's  termination of service. On May 22, 1996 the Company's stockholders
approved  the  Nonemployee  Director  Stock  Incentive  Plan  (see  Note 4 for
additional information) providing for an annual grant of 1,500 stock options. 
As  of  January  1,  1996,  the  Company  established the Nonemployee Director
Deferred  Stock  Unit  Plan,  pursuant to which each nonemployee director will
receive  an  annual grant of 500 DSUs.  These stock options and DSUs will vest
after  the  director  serves  a  full  one-year  term.

     USAir  Group  reversed approximately $93 thousand from its Adjustment for
minimum  pension  liability  (an element of Stockholders' Equity (Deficit)) in
conjunction  with the termination of the Retirement Plan for Outside Directors
of  USAir  Group,  Inc.

                                      8
<PAGE>
(7) Select Financial Information - USAM Investments

     USAM  owns  11%  of  the  Galileo  International  Partnership  ("GIP"),
approximately  11%  of the Galileo Japan Partnership ("GJP") and approximately
21% of the Apollo Travel Services Partnership ("ATS"). USAM accounts for these
investments  using  the  equity  method. The following is summarized financial
information  for  GIP  and  ATS    (combined,  in  millions):

<TABLE>
<CAPTION>

                         Three Months Ended         Nine Months Ended
                             September 30,             September 30,
                         ------------------         -----------------
                         1996          1995         1996         1995
                         ----          ----         ----         ----
                             (Unaudited)               (Unaudited)

<S>                     <C>           <C>         <C>          <C>
     Service revenues   $ 370         $ 327       $ 1,114      $ 1,004
     Cost and expenses    304           271           898          823
                        -----         -----       -------      -------
          Net earnings  $  66         $  56       $   216      $   181
                        =====         =====       =======      =======
</TABLE>

     USAM  received  distributions  from  GIP  and  ATS  of approximately $2.8
million  and $41.9 million (including a special distribution from ATS of $33.7
million  during the second quarter of 1996 which represented a distribution of
cash  to  partners),  respectively, during the first nine months of 1996. USAM
received distributions from GIP and ATS of approximately $1.8 million and $9.1
million,  respectively,  during  the  first  nine  months  of  1995.

(8) Non-Recurring  Items

     Results for the first nine months of 1996 include two non-recurring items
recorded  by  USAir  during  the  second  quarter  of  1996  related  to  its
non-operating  British  Aerospace  BAe-146-200  ("BAe-146")  aircraft.  USAir
reached agreements to sublease eleven BAe-146s during the second quarter. Both
non-recurring items resulted in credits to Operating Expense categories. USAir
reversed $22.5 million of previously accrued rent obligations related to these
aircraft  against  Aircraft  Rent  expense  and  reversed $7.0 million against
Aircraft  Maintenance  expense  related  to  previously  accrued  lease return
provisions.

(9) Subsequent  Event

     On  November  6,  1996,  USAir  announced  that  it  has  entered into an
agreement-in-principle  with  AVSA,  S.A.R.L.,  an  affiliate  of  aircraft
manufacturer  Airbus  Industrie ("Airbus"), regarding the possible acquisition
by  USAir  of  up  to  400  Airbus  A319,  A320  and  A321 narrowbody aircraft
(collectively,  the  "Airbus Aircraft") for delivery to USAir between 1997 and
2009.    Completion  of  the  transaction  is dependent upon USAir achieving a
competitive  cost  structure.  The proposed transaction, if consummated, would
be  comprised  of  120  firm  Airbus  Aircraft  and  120 Airbus Aircraft to be
reconfirmed  by  USAir  at  a  future date.  In addition, USAir would have the
option  to  acquire  up  to  160  additional  Airbus  Aircraft with open-ended
delivery  dates,  USAir  would  have  the  flexibility  in selecting among the
122-seat  A319,  the  144-seat  A320  and  the  168-seat  A321, depending upon
projected  industry  conditions at the time final delivery schedules were set.

                                      9

<PAGE>
     The agreement-in-principle with Airbus is subject to several conditions. 
Included  are  Board  of  Directors  approvals, reaching a definitive purchase
agreement  and  related  documentation  with  Airbus  and  USAir  reaching  a
satisfactory  arrangement  with  one  or  more  engine  manufacturers.

     The  Airbus Aircraft are presently intended as, at a minimum, replacement
aircraft  for  USAir's  existing  fleet of McDonnell Douglas DC-9-30 and MD-80
aircraft, Boeing 737-200 aircraft, and Fokker F-28-4000 aircraft, all of which
are  intended  to be disposed of by USAir.  The Company has not yet determined
whether  consummation  of  the  Airbus  transaction and the disposition of the
aircraft  intended  to  be  replaced would require the Company to recognize an
"impairment  loss"  in  accordance  with  Statement  of  Financial  Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived  Assets  to  be  Disposed  Of."













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                                      10
<PAGE>
                        Part 1.  Financial Information
                        Item 1B.  Financial Statements
<TABLE>
<CAPTION>

USAir, Inc.
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended September 30, 1996 and 1995 (unaudited)
--------------------------------------------------------------------------
(in thousands)
                                                     Three Months Ended               Nine Months Ended
                                                        September 30,                    September 30,
                                                     ------------------               -----------------
                                                    1996             1995            1996            1995
                                               ---------------  ---------------  -------------  ---------------
<S>                                            <C>              <C>              <C>            <C>
Operating Revenues
     Passenger transportation                  $    1,739,074   $    1,561,583   $  5,093,175   $    4,724,470 
     Cargo and freight                                 38,671           36,923        115,066          115,658 
     Other                                            146,312          144,300        449,028          419,627 
                                               ---------------  ---------------  -------------  ---------------
          Total Operating Revenues                  1,924,057        1,742,806      5,657,269        5,259,755 

Operating Expenses
     Personnel costs                                  771,279          691,925      2,237,314        2,077,828 
     Aviation fuel                                    178,260          146,811        504,728          456,319 
     Commissions                                      137,090          126,110        410,854          404,269 
     Aircraft rent                                    103,009           98,295        285,931          300,500 
     Other rent and landing fees                      101,263          101,428        298,417          299,146 
     Aircraft maintenance                              62,099           70,306        222,710          226,497 
     Depreciation and amortization                     73,511           84,007        226,508          252,157 
     Other, net                                       400,779          357,626      1,176,383        1,092,326 
                                               ---------------  ---------------  -------------  ---------------
          Total Operating Expenses                  1,827,290        1,676,508      5,362,845        5,109,042 
                                               ---------------  ---------------  -------------  ---------------

          Operating Income (Loss)                      96,767           66,298        294,424          150,713 

Other Income (Expense)
     Interest income                                   22,041           13,385         51,522           32,158 
     Interest expense                                 (71,255)         (75,931)      (213,323)        (225,526)
     Interest capitalized                               2,280              758          5,702            7,730 
     Equity in earnings (loss) of affiliates            9,791            9,234         31,102           27,781 
     Other, net                                       (19,931)           6,220        (20,302)           9,930 
                                               ---------------  ---------------  -------------  ---------------
          Other Income (Expense), Net                 (57,074)         (46,334)      (145,299)        (147,927)
                                               ---------------  ---------------  -------------  ---------------

Income (Loss) Before Taxes                             39,693           19,964        149,125            2,786 

Provision (Credit) for Income Taxes                    11,646            3,365         15,440            3,365 
                                               ---------------  ---------------  -------------  ---------------

Net Income (Loss)                              $       28,047   $       16,599   $    133,685   $         (579)
                                               ===============  ===============  =============  ===============


<FN>

See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
                                      11

<PAGE>
<TABLE>
<CAPTION>

USAir, Inc.
Condensed Consolidated Balance Sheets
September 30, 1996 (unaudited) and December 31, 1995
----------------------------------------------------
(dollars in thousands, except per share amount)


                                                             September 30,    December 31,
                                                                 1996             1995
                                                            ---------------  --------------
<S>                                                         <C>              <C>
                              ASSETS
Current Assets
     Cash and cash equivalents                              $      653,893   $     879,613 
     Short-term investments                                        631,114          19,831 
     Receivables, net                                              417,097         321,755 
     Materials and supplies, net                                   217,535         222,245 
     Prepaid expenses and other                                    124,391          97,922 
                                                            ---------------  --------------
          Total current assets                                   2,044,030       1,541,366 

Property and Equipment
     Flight equipment                                            5,043,310       5,021,520 
     Ground property and equipment                               1,069,618       1,052,706 
     Less accumulated depreciation and amortization             (2,377,058)     (2,222,814)
                                                            ---------------  --------------
                                                                 3,735,870       3,851,412 
     Purchase deposits                                              64,261          17,026 
                                                            ---------------  --------------
          Property and equipment, net                            3,800,131       3,868,438 

Other Assets
     Goodwill, net                                                 498,524         510,562 
     Other intangibles, net                                        302,353         312,539 
     Other assets, net                                             644,013         590,622 
                                                            ---------------  --------------
          Total other assets                                     1,444,890       1,413,723 
                                                            ---------------  --------------

                                                            $    7,289,051   $   6,823,527 
                                                            ===============  ==============

          LIABILITIES & STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities
     Current maturities of long-term debt                   $       94,646   $      77,496 
     Accounts payable                                              337,587         325,079 
     Payable to parent company                                     246,788         100,344 
     Traffic balances payable and unused tickets                   883,506         638,019 
     Accrued expenses                                            1,381,818       1,435,194 
                                                            ---------------  --------------
          Total current liabilities                              2,944,345       2,576,132 

Long-term Debt, Net of Current Maturities
     Long-term debt                                              2,624,801       2,674,376 
     Note payable - parent company                                       -          67,556 
                                                            ---------------  --------------
          Total long-term debt, net of current maturities        2,624,801       2,741,932 
</TABLE>

                           (continued on next page)

                                      12

<PAGE>
<TABLE>
<CAPTION>

USAir, Inc.
Condensed Consolidated Balance Sheets
September 30, 1996 (unaudited) and December 31, 1995   (Continued)
------------------------------------------------------------------
(dollars in thousands, except per share amount)


                                                             September 30,    December 31,
                                                                 1996             1995
                                                            ---------------  --------------

LIABILITIES & STOCKHOLDER'S EQUITY (DEFICIT)   (Continued)
<S>                                                         <C>              <C>
Deferred Credits and Other Liabilities
Deferred gains, net                                                363,186         382,995 
     Postretirement benefits other than pensions,
          non-current                                            1,076,438       1,015,373 
     Non-current employee benefit liabilities and other            457,769         418,268 
                                                            ---------------  --------------
          Total deferred credits and other liabilities           1,897,393       1,816,636 

Stockholder's Equity (Deficit)
Common stock, par value $1 per share, authorized
     1,000 shares, issued and outstanding 1,000 shares                   1               1 
Paid-in capital                                                  2,416,131       2,416,131 
Retained earnings (deficit)                                     (2,515,625)     (2,649,310)
Adjustment for minimum pension liability                           (77,995)        (77,995)
                                                            ---------------  --------------
          Total stockholder's equity (deficit)                    (177,488)       (311,173)
                                                            ---------------  --------------

                                                            $    7,289,051   $   6,823,527 
                                                            ===============  ==============













<FN>

See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
                                      13

<PAGE>
<TABLE>
<CAPTION>

USAir, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 (unaudited)
---------------------------------------------------------
(in thousands)

                                                              Nine Months Ended September 30,
                                                                      1996        1995
                                                                   ----------  ----------
<S>                                                                <C>         <C>
Cash and cash equivalents beginning of period                      $ 879,613   $ 428,925 
                                                                   ----------  ----------

Cash flows from operating activities
     Net income (loss)                                               133,685        (579)
     Adjustments to reconcile net income (loss) to
        cash provided by (used for) operating activities
          Depreciation and amortization                              226,508     252,157 
          Loss (gain) on disposition of property                        (373)    (13,595)
          Amortization of deferred gains and credits                 (19,809)    (19,809)
          Other                                                       21,708      (2,014)
          Changes in certain assets and liabilities
               Decrease (increase) in receivables                    (91,112)   (132,123)
               Decrease (increase) in materials, supplies,
                  prepaid expenses and intangible pension assets     (32,445)        (71)
               Increase (decrease) in traffic balances
                  payable and unused tickets                         245,487     217,724 
               Increase (decrease) in accounts payable
                  and accrued expenses                                75,901     119,017 
               Increase (decrease) in postretirement
                  benefits other than pensions, non-current           61,065      55,455 
                                                                   ----------  ----------
                    Net cash provided by (used for)
                      operating activities                           620,615     476,162 

Cash flows from investing activities
     Aircraft acquisitions and purchase deposits, net                (37,231)    (49,675)
     Additions to other property                                    (101,211)    (49,556)
     Proceeds from disposition of property                            14,748     151,909 
     Change in short-term investments                               (603,983)     21,994 
     Change in restricted cash and investments                        (2,347)        330 
     Payment of debt for affiliated company                          (42,830)          - 
     Other                                                           (10,490)     (1,421)
                                                                   ----------  ----------
          Net cash provided by (used for) investing
               activities                                           (783,344)     73,581 
</TABLE>

                           (continued on next page)
                                      14

<PAGE>
<TABLE>
<CAPTION>

USAir, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 (unaudited)    (Continued)
------------------------------------------------------------------------
(in thousands)

                                                        Nine Months Ended September 30,


                                                             1996              1995
                                                       ----------------  ----------------
<S>                                                    <C>               <C>
Cash flows from financing activities
     Issuance of debt                                          103,002                 - 
     Reduction of debt                                        (165,993)         (114,352)
                                                       ----------------  ----------------
          Net cash provided by (used for) financing
               activities                                      (62,991)         (114,352)
                                                       ----------------  ----------------

Net increase (decrease) in cash and cash  equivalents         (225,720)          435,391 
                                                       ----------------  ----------------

Cash and cash equivalents end of period                $       653,893   $       864,316 
                                                       ================  ================

Noncash investing and financing activities
     Issuance of debt - refinancing of debt secured
          by aircraft                                  $       159,998   $             - 
                                                       ================  ================
     Reduction of debt - refinancing of debt
          secured by aircraft                          $       154,422   $             - 
                                                       ================  ================
     Reduction of parent company debt - aircraft
          acquisitions                                 $        68,641   $             - 
                                                       ================  ================
     Issuance of debt - aircraft acquisitions          $        26,075   $       162,125 
                                                       ================  ================
     Reduction of debt - aircraft purchase deposits    $             -   $        70,837 
                                                       ================  ================
     Underwriter's fees - refinancing of debt
          secured by aircraft                          $         2,488   $             - 
                                                       ================  ================

Supplemental Information
     Cash paid during the year for interest, net
          of amounts capitalized                       $       216,360   $       235,380 
                                                       ================  ================
     Net cash (received) paid during the year
          for income taxes                             $         6,042   $         4,751 
                                                       ================  ================



<FN>

See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
                                      15

<PAGE>
                                 USAir, Inc.
             Notes to Condensed Consolidated Financial Statements
                                 (Unaudited)

(1) Basis  of  Presentation

     The  accompanying Condensed Consolidated Financial Statements include the
accounts  of  USAir, Inc. ("USAir") and its wholly-owned subsidiary USAM Corp.
("USAM").  USAir  is  a  wholly-owned  subsidiary of USAir Group, Inc. ("USAir
Group").

     USAir  has  announced  that  it  will  terminate  its  Airline  Technical
Services,  LLC  joint  venture  with  a  subsidiary  of  British  Airways Plc,
effective  January  1997.  Airline Technical Services, LLC, a Delaware limited
liability  company,  was  formed  during  the  fourth  quarter of 1995 for the
purpose  of offering joint aviation maintenance, and technical and engineering
expertise  in the Americas.  Amounts related to this joint venture included in
the  Company's  financial  results  for  the  first  nine  months  of 1996 are
immaterial  and  no  material  charges  are  expected  to  result  from  its
termination.

     Management  believes  that all adjustments necessary for a fair statement
of  results  have  been  included  in  the  Condensed  Consolidated  Financial
Statements  for  the  interim  periods  presented,  which  are  unaudited. All
significant  intercompany  accounts and transactions have been eliminated. The
preparation  of  financial  statements  in  conformity with generally accepted
accounting  principles  requires  management to make estimates and assumptions
that  affect  the reported amounts of assets and liabilities and disclosure of
contingent  assets and liabilities at the date of the financial statements and
the  reported  amounts  of  revenues and expenses during the reporting period.
Actual  results  could  differ  from  those  estimates.

     Certain  1995  amounts  have  been  reclassified  to  conform  with  1996
classifications.

     These  interim  period Condensed Consolidated Financial Statements should
be read in conjunction with the Consolidated Financial Statements contained in
USAir's  Annual  Report  on  Form  10-K  for the year ended December 31, 1995.

(2) Select  Financial  Information  -  USAM  Investments

     Please  refer to Note 7 in USAir Group's "Notes to Condensed Consolidated
Financial  Statements"  on  Page  9  of  this  report.

(3) Non-Recurring  Items

     Please  refer to Note 8 in USAir Group's "Notes to Condensed Consolidated
Financial  Statements"  on  Page  9  of  this  report.


                                      16

<PAGE>
(4) Related  Party  Transactions

     During  the  third  quarter of 1996, USAir prepaid certain long-term debt
with  a  principal  balance  of  approximately  $42.8  million  for  Allegheny
Airlines,  Inc.  ("Allegheny"),  a wholly-owned regional airline subsidiary of
USAir Group. As a result of this transaction, USAir and Allegheny entered into
a  long-term note receivable/payable agreement which expires in the year 2003.
The  balance  of the long-term note receivable was approximately $42.5 million
as  of  September  30,  1996.

     Effective  October 1, 1996, USAir is purchasing the capacity generated by
USAir  Group's    three wholly-owned regional air carriers at a fixed rate per
ASM.  These arrangements have no effect on USAir Group's financial statements;
however,  USAir's  financial  statements  will  reflect  increased  operating
expenses from the capacity purchases and increased operating revenues from the
sale  of  the  purchased  capacity.

(5) Subsequent  Event

     Please  refer to Note 9 in USAir Group's "Notes to Condensed Consolidated
Financial  Statements"  on  Page  9  of  this  report.












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                                      17

<PAGE>
   Item 2.  Management's Discussion and Analysis of Financial Condition and
            Results of Operations.

     The  following  discussion relates to the financial condition and results
of  operations  of  USAir Group, Inc. ("USAir Group" or the "Company"). USAir,
Inc.  ("USAir")  is  the  Company's  principal  subsidiary  and  accounted for
approximately 92% of the Company's operating revenues for the third quarter of
1996.  Except  where  noted,  the following discussion is based primarily upon
USAir's  financial  condition,  results  of  operations  and future prospects.

     The  Company recognized net income of $67.7 million for the third quarter
of  1996  on operating revenues of $2.07 billion. USAir, whose results include
its  wholly-owned subsidiary USAM Corp. ("USAM"), recorded net income of $28.0
million  for the same period. For the first nine months of 1996, the Company's
net  income  was  $236.2  million  and  USAir's net income was $133.7 million.

     The  third  quarter  of 1996 was characterized by the continuation of the
relatively stable domestic economic climate and favorable capacity and pricing
trends  in  markets  served  by  the  Company's airline subsidiaries that have
existed  since  mid-1995. However, the Company's airline subsidiaries recently
began  experiencing  increased  competitive pressure. ValuJet Inc. ("ValuJet")
reinstated service on September 30th, Delta Air Lines, Inc. ("Delta") launched
its  low  cost,  low fare product "Delta Express" on October 1st and Southwest
Airlines,  Inc.  ("Southwest")  further  expanded  its  East Coast presence on
October  27th.  ValuJet  had  reduced  its  service  in May 1996 and suspended
operations entirely on June 17, 1996. The Company estimates that approximately
8%  of  USAir's  capacity  (as  measured  by  available  seat miles or "ASMs")
directly  overlapped with ValuJet's route structure prior to ValuJet's service
reduction. ValuJet, which operated 51 aircraft prior to its service reduction,
currently  operates 15 aircraft. The Company believes that ValuJet's cessation
of operations had a favorable effect on the Company's Passenger Transportation
revenues  during  the second and third quarters of 1996, but has not precisely
quantified  such  effect.  The  Company is unable to predict whether ValuJet's
capacity  in  markets also served by USAir will eventually match or exceed the
pre-May  1996  levels.

     The  Company  considers  the  presence  of  Delta Express and Southwest a
serious  competitive  threat  in  markets  served by its airline subsidiaries.
Delta  Express marks the culmination of Delta's efforts to establish a product
capable  of competing with low cost, low fare air carriers such as ValuJet and
Southwest.  Delta  Express,  which  became possible as a result of a new labor
agreement  Delta  recently  entered  into  with  its  unionized  pilots group,
currently  operates  between  Florida  and  10  Northeast  and Midwest cities.
Southwest,  which  first  entered  the  intra-East  Coast  market during 1993,
recently  initiated  service between Providence and Baltimore, Orlando, Tampa,
Nashville  and  Chicago.  Southwest's  service  at  Providence,  which  is
approximately  60  miles  from  Boston, has resulted in some passenger traffic
being  drawn from Boston's Logan International Airport. USAir and its regional
airline affiliates have substantial operations at Boston's Logan International
Airport.  Southwest has reported that its unit operating cost is approximately
7.50 cents per ASM and USAir estimates that Delta Express' unit operating cost
will  be  near this level. USAir's unit operating cost was 12.44 cents per ASM
for  the  third  quarter  of  1996.

                                      18

<PAGE>
     The  Company  estimates  that  USAir's  direct  route  overlap with Delta
Express and Southwest is currently 2.4% and 2.3%, respectively (as measured by
ASMs).  However,  the Company anticipates that USAir's route overlap with both
competitors,  as  well as the intensity of the competitive pressure on USAir, 
will  increase  as Delta Express follows its planned doubling of operations by
January 1997 and Southwest allocates additional resources to its new Northeast
operations.  Direct  competition  with  low  cost,  low  fare  air carriers or
operations  has  typically  resulted  in the dilution of yield realized by the
Company's  airline  subsidiaries, depending on the number of markets affected.

     USAir's  cost  structure  continues  to  be  the highest of all major air
carriers in the U.S. Despite the Company's favorable financial results for the
first  nine months of 1996, the competitive threat posed by low cost, low fare
competition  presents a serious challenge to the Company to lower USAir's cost
structure  to  remain  competitive  and  ensure long-term financial viability.

                   Negotiations With Organized Labor Groups

     USAir's  contract  with  the  International Association of Machinists and
Aerospace Workers ("IAM") became amendable in October of 1995 and its contract
with  the  Air  Line Pilots Association ("ALPA") became amendable on April 30,
1996.  USAir's  contract with its flight attendant employee group, represented
by  the Association of Flight Attendants ("AFA"), will be amendable on January
1,  1997.  Collective  bargaining  talks  between  USAir  and the IAM and ALPA
continued  during the third quarter. USAir has also had preliminary talks with
the  AFA.  USAir cannot predict the outcome of these negotiations at this time
or  if  it  will be able to secure meaningful wage and benefit concessions and
productivity  improvements  from  its  unionized  employee groups. The Company
remains  committed  to reducing USAir's personnel costs and improving employee
productivity.

             Proposed British Airways-American Airlines Alliance

     On  June  11,  1996,  American  Airlines,  Inc.  ("American") and British
Airways  Plc  ("British  Airways")  announced  a  proposed alliance to jointly
market,  price  and  manage  their  North Atlantic airline services, effective
April 1, 1997, subject to U.S. and international approvals. The joint services
would  carry  the  designator codes of both airlines and each would code-share
beyond  the  other's  gateways. The two airlines have also indicated that they
intend  to  act  cooperatively  in  other  areas,  such  as  marketing, sales,
facilities  use  and cargo. British Airways and American have stated that they
will  seek  antitrust  immunity in connection with approval of their alliance.
Certain  competition  authorities  in  the U.S. and Europe have made inquiries
into  the  proposed  alliance  and several airlines serving the North Atlantic
have  raised  very  strong  objections  to  the  proposed  alliance.

     On  July  30,  1996,  the  Company  and USAir initiated a lawsuit in U.S.
District  Court for the Southern District of New York against British Airways,
BritAir  Acquisition  Corp., Inc., American and American's parent company, AMR
Corp.  The  Company and USAir have claimed that British Airways, in pursuit of
an  alliance with American, has breached its fiduciary duty to the Company and
USAir  and  has violated certain provisions of the January 21, 1993 Investment
Agreement  between  the  Company and British Airways. In addition, the lawsuit
claims  that  American  has  aided

                                      19

<PAGE>
and abetted British Airways' breach of its fiduciary duties and has tortiously
interfered with British Airways' performance of its obligations under the
Investment Agreement. The lawsuit also claims that the defendants are in
violation of U.S. antitrust laws that prohibit conduct that harms competition.

     On  September  20,  1996,  and  September 27, 1996, respectively, British
Airways and American filed Motions to Dismiss the lawsuit brought by USAir. In
a  hearing on October 25, 1996, U.S. District Court Judge Cederbaum heard oral
arguments  on  the  Motions  to  Dismiss. The Court dismissed a portion of the
lawsuit  against  American  relating to non-antitrust claims. The other claims
against  American  and British Airways remain pending and the Court took under
submission  the  Motions  to  Dismiss  these  claims.

     The  Company  is  unable  to predict at this time the ultimate outcome of
this  lawsuit.

                Payment of Dividends on Senior Preferred Stock

     On  October  25, 1996, the Company paid dividends of $40.0 million on its
outstanding  Senior  Preferred Stock. The Company also paid dividends of $43.0
million on its outstanding Senior Preferred Stock during August 1996. Prior to
the  August  1996  dividend  payment,  the Company had deferred the payment of
dividends  on  all of its outstanding preferred stock issuances effective with
dividend  payments  due  September  30,  1994.

     The  Company's capital surplus as of September 30, 1996, as calculated in
accordance  with  Delaware  General  Corporation  Law  based  on the Company's
Condensed  Consolidated Balance Sheets (which are contained in Part I, Item 1A
of this report), was $33.1 million. This surplus amount is after the effect of
the  October  dividend  payment, which was accrued for payment as of September
30,  1996. The Company's outstanding Series B Preferred Stock is junior to the
Company's  Senior  Preferred  Stock  and  is not eligible to receive dividends
until  the  deferred  dividends on the Senior Preferred Stock are paid in full
and  all Senior Preferred Stock dividend payments are current. There can be no
assurance  of  when  or  if  the  Company's  Board  of  Directors will declare
additional  dividends  on  the  Company's  outstanding  capital  stock.

     After the October dividend payment, accumulated deferred dividends on all
of  the  Company's  outstanding  preferred  stock issuances, including penalty
dividends  thereon,  totaled  approximately  $97.9  million. See Note 3 to the
Company's  Condensed  Consolidated  Financial  Statements contained in Part I,
Item  1A of this report for a description of each of the Company's outstanding
preferred  stock  issuances and Part II, Item 3 of this report, "Defaults Upon
Senior  Securities,"  for  additional  information with respect to accumulated
deferred  dividends.

                            Government Regulation

     The  Federal Aviation Administration ("FAA") has proposed new regulations
that  would  require flight data recorders that measure more flight parameters
than  most original equipment flight data recorders. The proposed regulations,
subject  to  DOT approval, would require the upgraded flight data recorders to
be installed within four years. The proposal, as drafted, would affect USAir's

                                      20

<PAGE>
entire  operating  fleet. The Company estimates that the proposed regulations,
if  adopted,  would  cost  USAir  approximately $20 million over the four year
period.  The  Company  cannot predict whether or when the proposed regulations
will  be  adopted  or  if the proposed regulations will result in expenditures
consistent  with  the  Company's  current  estimate.

     Following  the  July 1996 accident involving a Trans World Airlines, Inc.
aircraft  and  the  speculation  that  the cause of the accident may have been
sabotage,  President  Clinton  ordered  new  security  measures  related  to
passenger,  baggage  and  cargo  screening,  particularly  with  respect  to
international  operations. The increased security measures have resulted in an
increase  in  the  Company's operating expenses, although the dollar effect of
the  new  security  measures  is  not  material.   The President also formed a
special  committee which is reviewing aviation safety and airport security, as
well as the air traffic control system.  The committee's final recommendations
are  not  expected  before  February  1997.    Further  increases  in
government-mandated  security  measures  may  have  an  adverse  effect on the
Company's  results  of  operations  and  financial  condition depending on the
ability  of  USAir and its regional affiliates to pass-through any new Federal
taxes,  surcharges  or  additional  operating  expenses  to  customers.    Any
effective  increase in the cost of air transportation may dampen passenger and
cargo  traffic  levels  which  could  have  a  material  adverse effect on the
Company's  results  of  operations  and  financial  condition.

     The  10% Federal excise tax on domestic air transportation ("ticket tax")
was  reinstated on August 27, 1996, for tickets sold for travel before January
1,  1997.    This  tax,  10%  of the cost of an airline ticket, had previously
expired  on  January  1,  1996.    The  Company  believes  that  its Passenger
Transportation  revenues  were stimulated during the period the tax was not in
effect  -  the  absence of the tax effectively reduced the cost of air travel.
The  Company  cannot  estimate  the dollar impact of the tax expiration on its
Passenger  Transportation revenues during the period the tax was not collected
due  to  the complexity and number of factors that contribute to the Company's
performance  in  this  area. Legislation to extend the tax past the January 1,
1997  expiration date has not been enacted by Congress.  The Company is unable
to  predict  whether  this  tax  will  be  extended  past  the January 1, 1997
expiration  date  or  reimposed  at  a  later  date.   As mentioned above, any
effective  increase  in  the  cost  of  air transportation may have an adverse
effect on air transportation demand which could have a material adverse effect
on  the  Company's  results  of  operations  and  financial  condition.

     The  Company's airline subsidiaries became obligated to pay the $.043 per
gallon  Federal  Excise  Tax  on  Transportation  Fuels  on  October 1, 1995. 
Airlines  had  a  three  year exemption from this tax, which became law during
1992.  Attempts  to either rescind this tax or reinstate the airline exemption
continue,  although  these  efforts  have  not been successful to date.  USAir
cannot  predict  the ultimate outcome of future attempts to either rescind the
tax  or  reinstate  the airline exemption.  USAir estimates that this tax will
result  in additional operating expenses of approximately $42 million for 1996
based  on its current projected 1996 domestic aviation fuel consumption. USAir
recognized expense of approximately $11 million and $31 million as a result of
this tax during the third quarter and first nine months of 1996, respectively.

                                      21

<PAGE>
                              Other Information

     On November 12, 1996, USAir Group, Inc. announced that it will change its
name  to  US  Airways Group, Inc. and the name of its wholly-owned subsidiary,
USAir,  Inc.,  will change to US Airways, Inc.  The name changes are scheduled
to  become  effective  in  early  1997.    Following the name changes, USAir's
operations  will  be  conducted  under  the  name  US  Airways.

     On  November  6,  1996,  USAir  announced  that  it  has  entered into an
agreement-in-principle  with  AVSA,  S.A.R.L.,  an  affiliate  of  aircraft
manufacturer  Airbus  Industrie ("Airbus"), regarding the acquisition by USAir
of up to 400 Airbus A319, A320 and A321 narrowbody aircraft (collectively, the
"Airbus  Aircraft") for delivery to USAir between 1997 and 2009.  The proposed
transaction  would  be  comprised  of  120 firm Airbus Aircraft and 120 Airbus
Aircraft  to  be  reconfirmed  by  USAir at a future date.  In addition, USAir
would  have  the  option  to acquire up to 160 additional Airbus Aircraft with
open-ended  delivery  dates.    USAir  would have the flexibility in selecting
among  the  122-seat  A319, the 144-seat A320 and the 168-seat A321, depending
upon  projected  industry conditions at the time final delivery schedules were
set.

     The  agreement-in-principle  with  Airbus  remains  subject  to  required
approvals  of  Airbus  and  the  Company,  a definitive purchase agreement and
related  documentation  with Airbus, USAir reaching a satisfactory arrangement
with one or more engine manufacturers, and USAir achieving a competitive  cost
structure.

     The  Airbus Aircraft are presently intended as, at a minimum, replacement
aircraft  for  USAir's  existing  fleet of McDonnell Douglas DC-9-30 and MD-80
aircraft, Boeing 737-200 aircraft, and Fokker F-28-4000 aircraft, all of which
are  intended  to be disposed of by USAir.  The Company has not yet determined
whether  consummation  of  the  Airbus  transaction and the disposition of the
aircraft  intended  to  be  replaced would require the Company to recognize an
"impairment  loss"  in  accordance  with  Statement  of  Financial  Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived  Assets  to  be  Disposed  of."

     USAir  also  announced  that  it  would  begin examining alternatives for
widebody  aircraft  to  support  USAir's  goal  of  increased  international
operations.

     USAir  has advised The Boeing Company ("Boeing") and Rolls Royce Plc that
it does not plan to accept delivery of the eight Boeing 757-200 aircraft USAir
presently  has  on  firm order. USAir is in continuing discussions with Boeing
and  other relevant parties regarding modifications to the applicable purchase
agreements.  Consistent  with those discussions and a recent written statement
from  Boeing  extending  the  scheduled delivery dates of the Boeing 757s from
1998 to 1999, USAir did not make a progress payment to Boeing of approximately
$3 million which was, prior to such extension, scheduled to be due on November
1,  1996. On November 7, 1996, Boeing alleged that USAir was in default of the
757  purchase  agreement for failing to make a progress payment on November 1,
1996.  Boeing  demanded  that  the  alleged default be cured and certain other
conditions  be  satisfied  by  November  14,  1996 or Boeing would purportedly
terminate the 757 purchase agreement and might seek to exercise other remedies
against  USAir.  USAir,  Boeing  and  other relevant parties are in continuing
discussions  regarding  the  status  of  the  737  and  757  purchase
                                      22
<PAGE>
agreements,  and  USAir  cannot  predict  whether Boeing will seek to exercise
remedies  against  USAir  and  if  so, whether the effect on USAir's financial
condition  or  results  of  operations  would  be  material.

     In  October  1996, certain Series B Preferred Stock shareholders informed
the  Company  of  their  intent  to  pursue  the right to elect two additional
directors to the Company's Board of Directors. Under the terms of the Series B
Preferred  Stock,  the  holders  of  that security have the right to elect two
directors  to  the Board of Directors of the Company if six quarterly dividend
payments  are not paid.  That right became effective on February 15, 1996 (see
information  related  to  the  Company's recent payment of dividends on Senior
Preferred Stock under "Payment of Dividends on Senior Preferred Stock" above).

     On  October  24,  1996,  USAir  notified  British  Airways  that  it  was
terminating  the code sharing and frequent traveler agreements between the two
companies effective March 29, 1997 as a result of British Airways' decision to
enter  into  an  alliance  with  American  (see  also  "Proposed  British
Airways-American  Airlines  Alliance"  above  ).    In addition, certain other
commercial  arrangements  between USAir and British Airways are in the process
of  being  terminated.    The Company does not anticipate any material adverse
impact  on its results of operations or financial condition as a result of the
termination  of  these  arrangements.

     On October 23, 1996, the Company and USAir filed a Current Report on Form
8-K  with  the  Securities and Exchange Commission ("SEC") related to the news
release  of financial results for both companies for the three months and nine
months ended September 30, 1996.  The Company disclosed in this Current Report
that  USAir's  capacity (ASMs) is expected to increase by approximately 8% for
the  fourth  quarter  of  1996  versus the comparable periods in 1995 and that
USAir's  unit  operating cost for the fourth quarter of 1996 is expected to be
approximately  2%-3% higher, excluding aviation fuel expenses, compared to the
fourth  quarter  of 1995. USAir's bookings for the fourth quarter of 1996 have
been  at  levels consistent with those experienced during the third quarter of
1996,  considering  seasonality.    The Company also expects USAir's yield and
load  factor  for  the  fourth  quarter  of  1996 to remain relatively flat to
slightly  up  versus  the fourth quarter of 1995.  See "Results of Operations"
below  for  information  related  to  estimated  future  increases  in certain
components  of  the  Company's  operating  expenses.

     The  Company  has  embarked  on  a program to upgrade and standardize the
interiors  of  USAir's operating aircraft over the next three years as part of
its  efforts  to  make  USAir  "the airline of choice." The first phase of the
program,  which  is in progress and expected to be completed during the fourth
quarter  of  1996, involves minor changes and improvements to the interiors of
each  of  USAir's operating aircraft. This phase of the program will result in
minimal  incremental  expenditures,  but will provide a substantial short-term
improvement  in  the  appearance  of  each  aircraft.  The second phase of the
program,  which  is  scheduled  to  begin  in February 1997 and expected to be
completed  in  1998,  includes,  depending  on  the  type  of  aircraft,  the
replacement  of  carpets,  seat cushions, sidewalls and overhead storage bins,
repainting  other aircraft interior components, reconfiguring and/or upgrading
seats,  expanding  first class seating and adding or replacing lavatories. The
Company  currently  estimates  that  the  second  phase  of  this program will

                                      23

<PAGE>
result in one-time incremental expenditures of approximately $85 million,
approximately $30 million of which is expected to be capitalized.

     Effective  November  1, 1996, the Company's 1992 Stock Option Plan ("1992
Plan")  was  amended to include a stock appreciation right ("SAR") feature and
SARs  were  granted  to option holders under this plan on a one-for-one basis.
For  each SAR, the holder is entitled to receive the excess of the fair market
value  of  a  share of the Company's Common Stock and $15. The exercise of any
SAR  cancels its tandem option. Conversely, the exercise of any option cancels
its  tandem SAR. The SARs have the same expiration date as the tandem options.
To  the  extent  the  fair market value of a share of its Common Stock exceeds
$15,  the  Company will record compensation expense based on SARs outstanding.
As  of  November  1,  1996,  approximately  4.9  million options and SARs were
outstanding  under  the  1992  Plan.

     In  April  1996,  USAir  introduced  electronic ticketing, or "ticketless
travel,"  as  an  option  for  customers traveling within the U.S. on USAir or
USAir  Express.  Electronic  ticketing  enables  a  customer  to book a flight
through  USAir's reservations system and receive a confirmation number instead
of  a  paper  ticket.  The Company believes that electronic ticketing enhances
customer  convenience  and  will  help  reduce  USAir's  distribution  costs.
Distribution  costs  currently  account  for  approximately  $1 billion of the
Company's annual operating expenses. Customer response to electronic ticketing
has  been  favorable  and  customer  use  of electronic ticketing has steadily
increased  since  its  introduction.    USAir  recently  announced that travel
agencies using the SABRE and Apollo computer reservation systems can now offer
their  customers  USAir's electronic ticketing option. USAir continues to work
towards  expanding electronic ticketing to other computer reservation systems,
international  service  and  USAir  Shuttle  flights.

     Seeking  to  increase  its  international operations, on August 21, 1996,
USAir  filed  with  the  U.S.  Department  of Transportation to serve London's
Heathrow  Airport  from Boston, Charlotte, Philadelphia and Pittsburgh.  USAir
currently  serves  Frankfurt,  Munich,  Madrid,  Paris  and  Rome.

     Pursuant  to  the  Investment  Agreement  between the Company and British
Airways, British Airways has the right to maintain its proportionate ownership
of  the  Company's  securities  under  certain  circumstances  by  purchasing
additional  shares of a series of Series T Cumulative Convertible Exchangeable
Senior  Preferred  Stock  ("Series  T  Preferred  Stock").   During April 1996
British  Airways  advised  the  Company that it would not exercise their right
(triggered  by  issuances  of  Common  Stock  pursuant  to certain USAir stock
incentive  and employee benefit plans during the nine month period ended March
31,  1996)  to  buy  additional  shares  of  Series  T  Preferred  Stock.

Results  of  Operations

     The  following  section  provides  an  overview  of  changes  in  certain
components  of  the  Company's  results of operations (the Company's Condensed
Consolidated Statements of Operations are contained in Part I, Item 1A of this
report).  See  Exhibit  99  to  this  report  for  select  USAir operating and
financial  statistics.  Exhibit 99 also includes the definition of each of the
terms  used  below.  All terms used in this section refer to USAir's scheduled
service  operations  except  for  unit  operating cost, which includes charter
service.
                                      24

<PAGE>
                 Three Month Period Ended September 30, 1996
                              Compared With the
                 Three Month Period Ended September 30, 1995

     USAir Group recorded net income of $67.7 million for the third quarter of
1996,  an  improvement  of $24.7 million (or 57.3%) versus its results for the
third  quarter  of  1995.  After  provision for preferred stock dividends (see
discussion  above under "Payment of Dividends on Senior Preferred Stock"), the
Company  earned  $45.4  million during the third quarter of 1996, or $0.69 per
common  share.

     USAir's  passengers,  RPMs,  capacity  (ASMs),  load factor and yield all
increased  quarter-over-quarter.  With the exception of the capacity increase,
these  statistics  increased  as  a  result  of the relatively stable domestic
economic  climate  and favorable capacity and pricing trends in markets served
by the Company's airline subsidiaries which prevailed during the third quarter
of  1996  (see  discussion above). In addition, as discussed under "Government
Regulation" above, the Company believes that the absence of the ticket tax for
most of the third quarter of 1996 may have had a stimulative effect on traffic
during  that  period. The quarter-over-quarter capacity increase was marginal.

     USAir  continues  to  be  the  highest-cost major air carrier in the U.S.
USAir's  unit  operating cost was 12.44 cents for the third quarter of 1996, a
9.1%  increase  versus its unit operating costs for the third quarter of 1995.
This  increase  is  primarily  the result of higher operating expenses applied
over  relatively  unchanged capacity levels period-over-period (see discussion
below  related  to  changes  in  certain components of the Company's operating
expenses).

Operating  Revenues

Passenger Transportation - USAir's Passenger Transportation revenues increased
$177.5  million,  or  11.4%, with the remainder of the $198.0 million increase
attributable  to the Company's regional airline subsidiaries. USAir's increase
is  the  result  of  a  4.7% increase in yield and a 6.3% increase in RPMs. In
addition,  the  average  passenger  journey  increased  4.1%  due primarily to
additional  long-haul  flying  quarter-over-quarter.    The  main factors that
contributed  to the Company's improved performance during the third quarter of
1996,  including  the general economic climate, market conditions, the absence
of  the  ticket  tax for most of the quarter and the temporary decrease in low
cost,  low  fare  competition,  are discussed above. The Company believes that
Hurricanes  Fran  and Edouard, which occurred during September 1996, adversely
affected  the Company's Passenger Transportation revenues by approximately $10
million.

     As  discussed  above, the Company's airline subsidiaries are experiencing
increased competitive pressure with ValuJet's recent reinstatement of service,
the  October  1996  launch  of Delta Express and Southwest's late-October 1996
expansion  into  the Northeast U.S. Direct competition with low cost, low fare
air  carriers  or  operations  has typically resulted in the dilution of yield
realized  by  the  Company's  airline subsidiaries, depending on the number of
markets  affected.

                                      25

<PAGE>
Other  Operating  Revenues - Fees received by USAir for passenger handling and
reservation  services  from  USAir  Express  air carriers (other than the fees
USAir  receives  from  the Company's three wholly-owned regional air carriers,
which  are  eliminated  during  the  consolidation of the Company's results of
operations)  increased  due  to  higher  passenger  volumes  and  a higher fee
structure.  In  addition,  USAir  experienced increased revenues from frequent
traveler  program  participation  fees,  reservation  cancellation  fees  and
aircraft  lease  arrangements.  The wet lease arrangement with British Airways
expired during the second quarter of 1996.  For the third quarter of 1995, wet
lease  revenues  of approximately $16.2 million were included in the Company's
Other  Operating  Revenues.  Increases  or  decreases  in  components of Other
Operating  Revenues  are  largely offset by related changes in Other Operating
Expenses  or  other  operating  expense  categories.

Operating  Expenses

Personnel  Costs  -  Interest  rate-driven  increases  in  pension  and
post-retirement  benefits  expenses, profit sharing expenses, contractual wage
increases  that USAir's pilot and flight attendant employee groups received in
January  1996  and  wage  increases received by certain non-contract employees
effective  January  1, 1996, combined to more than offset personnel complement
decreases. USAir's flight attendants and pilots also received contractual wage
increases  in  January 1995 and July 1995, respectively, and USAir's mechanics
received  contractual wage increases in March 1995. USAir had 40,047 full-time
equivalent  employees on September 30, 1996 versus 40,455 full-time equivalent
employees  on  September  30,  1995.  Pension,  long-term  disability  and
post-retirement  benefits  expenses  increased  approximately  $24.9  million
quarter-over-quarter.

     The  Company  recorded profit sharing expense of $41.1 million during the
third  quarter of 1996 versus $15.2 million during the third  quarter of 1995.
Based on its current projection of results for the fourth quarter of 1996, the
Company  expects to record additional profit sharing expenses of approximately
$41  million  during  the  fourth  quarter  of  1996.

Aviation  Fuel  -  USAir's  aviation fuel consumption was relatively unchanged
quarter-over-quarter,  but  rate  factors  contributed  to a 21.4% increase in
aviation  fuel  expense.  USAir  paid an average of 63.21 cents per gallon for
aviation  fuel  during  the  third quarter of 1996.  Aviation fuel prices have
continued  to  increase during the fourth quarter of 1996.  USAir is currently
paying  approximately 70 cents to 72 cents on average for a gallon of aviation
fuel.  Aviation fuel prices are subject to market conditions and other factors
that are generally outside of the Company's control. Fluctuations in the price
of  aviation  fuel  can  have  a  dramatic  effect on the Company's results of
operations. Based on current consumption, each one cent per gallon increase in
USAir's cost of aviation fuel translates into an increase of approximately $11
million in USAir's annual aviation fuel expense.  See Other Operating Expenses
below  related  to  Federal  taxes  on  aviation  fuel.

Commissions-  Increased due to increases in Passenger Transportation revenues.

Aircraft  Rent  -  Increased  due  primarily  to  two  leased Boeing 767-200ER
aircraft  reentering  USAir's  operating fleet during the first half of 1996. 
USAir  recognized  expenses  related  to these aircraft in the Other Operating
Expenses  category  while  they  were  operated  by  British  Airways.

                                      26

<PAGE>
Aircraft  Maintenance  -  Decreased  approximately  $7.8 million. Efficiencies
gained  from  reengineering efforts in USAir maintenance areas, the effects of
fewer  operating  aircraft  in USAir's fleet and timing factors contributed to
the  expense  reduction.    USAir  recently  signed  a 10 year contract with a
subsidiary  of the General Electric Company ("GE") for the upkeep and overhaul
of USAir's CF6 and CFM-56 jet engines.  These engines, originally manufactured
by  GE,  power  all  of  USAir's 767-200ER, 737-300 and 737-400 aircraft.  The
Company  expects  a  long-term  decrease  in maintenance costs associated with
these  engines  because  of  the  new  contract,  but  may  experience  higher
maintenance costs during the fourth quarter of 1996 due to the transition from
the  former  servicer  to  GE.

Depreciation  and  Amortization - Decreased due mainly to fewer owned aircraft
in  USAir's  operating  fleet.

Other Operating Expenses - Increased due primarily to additional Federal taxes
on  aviation  fuel  and  increased  communications-related costs.  The Federal
Excise  Tax  on Transportation Fuels totaled approximately $11 million for the
third  quarter of 1996 (see also "Government Regulation" above). The wet lease
arrangement  with  British  Airways expired during the second quarter of 1996,
however,  wet  lease  expenses of approximately $16.2 million were included in
the Company's Other Operating Expenses for the third quarter of 1995 (see also
Other  Operating  Revenues  and  Aircraft  Rent  above).

Other  Income  (Expense)

Interest Income - Increased due mainly to higher Cash and Cash Equivalents and
Short-Term  Investments  balances  period-over-period.

Interest  Expense  -  Decreased primarily as the result of less long-term debt
outstanding  period-over-period.  The  Company  made  early debt repayments of
approximately  $44.8  million  during  the  third  quarter  of  1996.

Equity  in  Earnings  (Loss)  of Affiliates - Amounts pertain to USAM's equity
interest  in  the earnings of Galileo International Partnership, Apollo Travel
Services  Partnership  ("ATS")  and Galileo Japan Partnership. Results for all
three  partnerships improved primarily driven by increases in airline industry
passenger  volumes  period-over-period.

Other,  Net  -  Results  for the third quarter of 1996 include expense of $9.8
million  related to USAir's settlement of litigation involving travel agencies
(see  Part  II,  Item  1.  "Legal Proceedings" for additional information) and
reserves  of  $10.5  million  related  to  USAir's planned disposition of five
non-operating  aircraft. Results for the third quarter of 1995 included a gain
of  $5.5  million  related  to  the  sale  of certain Boeing 737-300 aircraft.

                                      27

<PAGE>
                 Nine Month Period Ended September  30, 1996
                              Compared With the
                 Nine Month Period Ended September  30, 1995

          On  a year-to-date basis, USAir Group recorded net income of $236.2
million,  an  improvement  of  $177.2 million or triple its net income for the
first nine months of 1995.  After provision for preferred stock dividends (see
discussion  above under "Payment of Dividends on Senior Preferred Stock"), the
Company  earned  $169.1 million during the first nine months of 1996, or $2.58
per  common  share.

     USAir's  passengers  and  capacity  (ASMs)  decreased period-over-period,
however,  RPMs,  load  factor and yield all increased for the same comparative
period.  Passenger  and  capacity  decreases  mainly reflect mid-1995 schedule
reductions  with  the  harsh  winter  weather during the first quarter of 1996
contributing to the decrease.  The increase in RPMs, load factor and yield are
primarily  due  to  the  continuation of a relatively stable domestic economic
climate  and  favorable  capacity  and pricing trends in markets served by the
Company's airline subsidiaries. In general, the favorable capacity and pricing
trends  have  been  evident  since  the demise of the Continental Lite product
(offered  by  Continental Airlines, Inc.) early in the second quarter of 1995.
Competition  with  Continental  Lite  included USAir lowering fares in certain
markets  to maintain market share. In addition, as discussed under "Government
Regulation"  above,  the  Company  believes that the absence of the ticket tax
during  the  first  eight  months of 1996 may have had a stimulative effect on
traffic  during  that  period.

     USAir's  unit operating cost was 12.66 cents for the first nine months of
1996,  a 12.4% increase versus the first nine months of 1995. This increase is
primarily  the  result of higher operating expenses applied over slightly less
capacity (ASMs) period-over-period (see discussion below related to changes in
certain  components  of  the  Company's  operating  expenses).

     USAir  recorded  two  non-recurring items during the first nine months of
1996  related  to  its non-operating British Aerospace BAe-146-200 ("BAe-146")
aircraft.  USAir  reached  agreements  to  sublease eleven BAe-146s during the
second  quarter  of 1996 (in addition to the three sublease agreements reached
during  the  fourth  quarter  of  1995).  Both non-recurring items resulted in
credits  to  Operating  Expense  categories.  USAir  reversed $22.5 million of
previously accrued rent obligations related to these aircraft against Aircraft
Rent  expense  and  reversed $7.0 million against Aircraft Maintenance expense
related  to  previously  accrued  lease  return provisions. USAir has recently
reached  an  agreement  to  dispose  of  its  only  owned  BAe-146.

Operating  Revenues

Passenger Transportation - USAir's Passenger Transportation revenues increased
$368.7  million,  or  7.8%,  with the remainder of the $442.1 million increase
attributable  to the Company's regional airline subsidiaries. USAir's increase
is  primarily  the result of a 6.7% increase in yield, a 1.0% increase in RPMs
and  a  2.8%  increase  in  average  passenger  journey. The main factors that
contributed  to  the  Company's improved year-over-year performance, including
the  general economic climate, market conditions, the impact of the absence of
the  ticket  tax  during  the  first

                                      28

<PAGE>
eight  months  of  1996  and  the  temporary  decrease  in  low cost, low fare
competition  experienced  by  the  Company's  airline  subsidiaries during the
second  and  third  quarters  of  1996,  are  discussed  above.

     The  Company estimates that severe winter weather within the Eastern U.S.
and  the  partial Federal Government shutdown adversely affected first quarter
1996  revenues  by  approximately  $55  million.    In  addition,  the Company
estimates  that  Hurricanes  Fran and Eduoard, which occurred during September
1996,  adversely  affected  the Company's Passenger Transportation revenues by
approximately  $10  million.  The Company's airline subsidiaries faced intense
competitive  pressure  from  Continental  Lite during early 1995. As mentioned
above,  competition  with  Continental  Lite  included USAir lowering fares in
certain  markets  to  maintain  market  share.

     See  also  the  quarter-over-quarter analysis of Passenger Transportation
revenues  above  for information related to the recent increase in competitive
pressure  on  the  Company's  airline  subsidiaries.

Other  Operating  Revenues - Fees received by USAir for passenger handling and
reservation  services  from  USAir Express carriers (other than the fees USAir
receives  from  the  Company's three wholly-owned regional air carriers, which
are  eliminated  during  the  consolidation  of  the  Company's  results  of
operations)  increased  due  to  higher  passenger  volumes  and  a  higher
per-passenger  fee  structure.  In addition, USAir had increased revenues from
frequent  traveler  program  participation fees, reservation cancellation fees
and  aircraft  lease  arrangements.  Revenues  received  from  the  wet  lease
arrangement  with British Airways decreased approximately $35.0 million due to
the  expiration  of the arrangement during May 1996. Increases or decreases in
components  of  Other Operating Revenues are largely offset by related changes
in  Other  Operating  Expenses  or  other  operating  expense  categories.

Operating  Expenses

Personnel  Costs - Increased due mainly to the same factors discussed above in
the  quarter-over-quarter  analysis  of  Personnel  Costs.  Pension, long-term
disability  and  post-retirement  benefit  expenses increased by approximately
$63.4  million  period-over-period.    In  addition, expenses related to stock
option  grants, stock grants, severance payments and similar-type compensation
increased  approximately  $22.1  million  year-over-year.

     The  Company  recorded profit sharing expense of $82.4 million during the
first nine months of 1996 versus $15.2 million during the first nine months of
1995.    See  related  discussion  above  in  quarter-over-quarter analysis of
Personnel  Costs.

Aviation  Fuel - USAir experienced an increase in the average cost of aviation
fuel  per gallon of approximately 8.75 cents period-over-period. The Company's
Aviation  Fuel  expense  increased  $54.7  million.  See  discussion  of
quarter-over-quarter  changes  in  Aviation Fuel expense above. See also Other
Operating  Expenses  below  related  to  Federal  taxes  on  aviation  fuel.

                                      29

<PAGE>
Commissions  -  Increases  linked  to higher Passenger Transportation revenues
were  partially  offset  by  the  effects  of  the  revised rate structure for
commissions  paid  to  travel agencies, which went into effect during February
1995.

Aircraft  Rent  -  Excluding  the  effects of the non-recurring item discussed
above,  Aircraft  Rent  expense increased approximately 4.4%.  The increase is
due  primarily  to  two  leased  Boeing  767-200ER aircraft reentering USAir's
operating  fleet  during  the  first  half  of 1996. USAir recognized expenses
related  to these aircraft in the Other Operating Expenses category while they
were  operated  by  British  Airways.

Aircraft  Maintenance  -  Excluding  the  effects  of  the  non-recurring item
discussed  above,  Aircraft  Maintenance  expense increased approximately $8.0
million.  Efficiencies  gained from reengineering efforts in USAir maintenance
areas,  the  effects  of  fewer operating aircraft in USAir's fleet and timing
factors  were  more  than  offset  by  an  increase  in the average cost USAir
incurred  to  overhaul  certain jet engines. See quarter-over-quarter analysis
above  related to USAir's new contract with GE for repair and overhaul work of
certain  jet  engines.

Depreciation  and  Amortization - Decreased mainly due to fewer owned aircraft
in  USAir's  operating  fleet.

Other Operating Expenses - Increased primarily due to additional Federal taxes
on aviation fuel and  increases in insurance and communications-related costs.
USAir  also experienced higher credit card expenses linked to higher Passenger
Transportation  revenues.    The  Federal  Excise  Tax on Transportation Fuels
totaled  approximately $31 million for the first nine months of 1996 (see also
"Government  Regulation" above). Expenses related to the wet lease arrangement
with  British  Airways  decreased  approximately  $35.0  million  due  to  the
expiration  of  this  arrangement  during  May  1996 (see also Other Operating
Revenues  above).

Other  Income  (Expense)

Interest Income - Increased due mainly to higher Cash and Cash Equivalents and
Short-Term  Investments    balances  period-over-period.

Interest  Expense  -  Decreased primarily as the result of less long-term debt
outstanding  period-over-period.  USAir  made  early  debt repayments totaling
approximately  $202.1  million  during 1995. See also the quarter-over-quarter
analysis  of  Interest  Expense  above.

Equity  in  Earnings  (Loss)  of  Affiliates  -  Results  for  USAM's  equity
investments improved due primarily to increases in  airline industry passenger
volumes  year-over-year.

Other,  Net  -  Net  expenses  increased  due  primarily  to  the same factors
discussed  above  in  the  quarter-over-quarter  analysis of Other, Net above.

                                      30

<PAGE>
Liquidity  and  Capital  Resources

     Net  cash  provided  by  operations was $667.6 million for the first nine
months  of  1996.  As of September 30, 1996, Cash and Cash Equivalents totaled
$655.4  million and Short-Term Investments totaled $631.1 million.  USAir also
had  $102.3  million  deposited  in trust accounts to collateralize letters of
credit  and  worker's compensation policies at quarter-end. These deposits are
included  in  the Other Asset category on the Company's Condensed Consolidated
Balance  Sheets  (which  is contained in Part I, Item 1A of this report). USAM
received  a  special cash distribution of approximately $33.7 million from ATS
during  the  second  quarter  of  1996,  reflected  in  the  Other  operating
adjustments  category  on  the  Company's Condensed Consolidated Statements of
Cash  Flows  (which  is  contained  in  Part  I, Item 1A of this report).  The
special  distribution was part of an ATS distribution of cash to its partners.
USAM  has received distributions totaling approximately $44.8 million from its
computer  reservation  system  investments,  including  the  special  ATS
distribution,  during  the  first  nine  months  of  1996.

     The  Company  made  contributions of approximately $76 million to certain
defined  benefit  pension  plans  during the third quarter of 1996 in order to
meet  statutory  minimum  pension  funding requirements. Also during the third
quarter  of  1996, the Company revised its estimate of short-term pension plan
funding  requirements  resulting  in  a  decrease  in  the  Company's  current
liabilities.    The  combined  effect  of  the third quarter 1996 pension plan
funding payments and the revision of short-term pension plan funding estimates
was  a  decrease  in  the  Company's current liabilities of approximately $137
million  and  a corresponding increase in the Company's long-term liabilities.
The  effects  of  the revision, which have significantly reduced the Company's
estimate  of  anticipated  cash  outflows  for  the  next  twelve  months, are
reflected  in  the  Company's  Condensed  Consolidated  Balance  Sheets  as of
September  30,  1996.

     If  the  Company's  results  for  the fourth quarter of 1996 meet current
expectations,  the  Company  will  pay its remaining obligation under the 1992
Salary Reduction Plan, approximately $130 million, during the first quarter of
1997.    This  payment  would end the Company's obligations for profit sharing
under  this  plan (the anticipated first quarter 1997 payment will be based on
expenses  the  Company  recognizes  for  1996  and  in  earlier  periods).

     Effective November 1, 1996, the Company is obligated to pay the excess of
the  fair  market  value of a share of the Company's Common Stock and $15 upon
the  exercise  of  SARs issued under the Company's 1992 Stock Option Plan (see
discussion  above  under  "Other  Information").  SAR  exercises  could have a
material  adverse  effect  on  the  Company's anticipated future cash outflows
depending  on the number and timing of SAR exercises and the fair market value
of  a  share  of  the  Company's  Common  Stock  when  SARs  are  exercised.

     The  Company  has also initiated a program to upgrade and standardize the
interiors of USAir's operating aircraft.  This program, described under "Other
Information"  above,  will  result  in  currently  estimated  incremental
expenditures  of  approximately  $85  million, primarily during 1997 and 1998.

                                      31

<PAGE>
     As  discussed  in  "Other  Information"  above, USAir has entered into an
agreement-in-principle  with  an affiliate of Airbus for the acquisition of up
to  400  Airbus  Aircraft.  Although  the agreement-in-principle is subject to
several  contingencies,  the  acquisition  of  aircraft  by USAir could have a
material  effect  on the Company's anticipated long-term capital expenditures.

     The  Company  expects  to  satisfy  all  of  its  short-term  liquidity
requirements,  including  the  cost  of  USAir's aircraft interior upgrade and
standardization  program, through a combination of cash on hand and cash flows
from  operations.  Although  the  Company's  current  assets have increased by
approximately $502.4 million since the end of 1995, the Company remains highly
leveraged.  The Company and USAir require substantial working capital in order
to  meet  scheduled  debt  and  lease  payments  and  to  finance  day-to-day
operations.  In  addition,  the  Company  currently  does  not  have access to
short-term  credit  or  receivable sale facilities. Changes in certain factors
that  are  generally  outside  the  Company's  control,  such  as  an economic
downturn,  additional  government regulation, intensified competition from low
cost,  low  fare air carriers or operations (see related discussion above) and
further  increases  in  the  price  of  aviation fuel, could have a materially
adverse  effect on the Company's liquidity, financial condition and results of
operations.  USAir's  high  cost  structure  relative to its major competitors
results  in  the  Company being particularly susceptible to adverse changes in
general  economic  and  market  conditions.

     Investing  activities  during the first nine months of 1996 included cash
outflows  of  $142.9  million  for  the  acquisition  of assets ($21.2 million
related  to  progress  payments  for  Boeing  757-200  aircraft  (see  "Other
Information"  above  for recent developments concerning Boeing), $15.2 million
related  to  USAir's  purchase  of four Boeing 737-200 aircraft prior to lease
expiry  during  the  third  quarter  of 1996 and $105.7 million related to the
purchase of hush kits, rotables, computer equipment and various ground support
equipment).  The  Company's  Short-Term  Investments  increased $604.0 million
during  the  period  primarily  due  to  the  Company's  operations generating
significantly  more  cash  than needed to fulfill immediate operational needs.
The  Other  investing  uses of cash category includes $12.2 million related to
the purchase of debt issued by Shuttle, Inc. during the first quarter of 1996.
The net cash used by investing activities during the first nine months of 1996
was  $744.6  million.

     Net  cash  used  by  financing activities during the first nine months of
1996  was  $149.4  million.  During  the third quarter of 1996, USAir paid off
certain  long-term debt with a principal amount of approximately $42.8 million
for one of the Company's regional airline subsidiaries (USAir and the regional
air  carrier  entered  into  a  long-term  note  receivable agreement which is
reflected  in  USAir's  Other  Assets  on  its  Condensed Consolidated Balance
Sheets;  amounts related to the intercompany note agreement are eliminated for
purposes  of  consolidation  and  are therefore not reflected in the Company's
Condensed  Consolidated  Balance  Sheets).

     USAir  sold  $263.0  million principal amount of Enhanced Equipment Notes
("Enhanced  Notes")  during  the  first  quarter  of  1996  through  a private
placement offering under SEC Regulation 144A. USAir used the proceeds from the
offering  as  part  of  the  funds necessary to repay in full the indebtedness
incurred in connection with certain Boeing 757-200 aircraft delivered to USAir
in  1994  and  1995.  The  transaction is reflected on the Company's Condensed
Consolidated Statements of Cash Flows as proceeds from the issuance of debt of
$103.0  million  and  a  "non-cash"  issuance

                                      32

<PAGE>
of  debt  of  $160.0  million.   The non-cash component reflects proceeds that
USAir  directed  to  reduce debt and pay underwriter's fees at the time of the
offering.  USAir  used  the  cash  proceeds  it received from the offering and
additional  funds  to  make  debt  repayments  of approximately $105.5 million
immediately  following  the  offering.  The Enhanced Notes are secured by nine
Boeing  757-200  aircraft.  USAir filed a Form S-4 Registration Statement with
the  SEC  during July 1996 in connection with its offer to exchange registered
Enhanced  Notes  for  the privately-placed Enhanced Notes.  The exchange offer
was  completed  in  August  1996.    The exchange offer did not result in cash
inflows  or  outflows  with  the  exception  of  filing  fees  and  certain
administrative  costs.

     In  addition to the prepayment and refinancing transactions and the early
pay-off by USAir of an affiliate's third party debt, both discussed above, the
Company's  subsidiaries  made scheduled debt repayments of approximately $61.5
million  during the first nine months of 1996. USAir also incurred new debt of
$26.1  million  associated  with progress payments for Boeing 757-200 aircraft
(see  "Other  Information"  above for recent developments concerning Boeing). 
The $26.1 million is reflected as non-cash activity in the Company's Condensed
Consolidated  Statements of Cash Flows because USAir incurred the related debt
in  conjunction  with  the  payment  of  the  progress  payments.

     On  October  25, 1996, the Company paid dividends of $40.0 million on its
outstanding  Senior Preferred Stock.  The Company also paid dividends of $43.0
million  on  its  outstanding  Senior  Preferred Stock during August 1996. See
"Payment  of  Dividends  on  Senior  Preferred  Stock"  above  for  additional
information.

     As  of  September  30,  1996,  USAir  Group's  ratio of current assets to
current  liabilities  was  approximately  0.77  to 1 and the debt component of
USAir Group's capitalization structure was greater than 100% (and also greater
than  100%  if  the three series of mandatorily redeemable preferred stock are
considered  to  be  debt)  due  to  a  deficit  in  stockholders'  equity.

     Certain  information  contained  in  this  report  should  be  considered
"forward-looking  information".  Forward-looking  information  requires  the
Company  to  make  estimates of future revenues, expenses, activity levels and
economic  and  markets conditions, among other factors. Some of these factors,
such  as  aviation  fuel costs and general economic conditions, are outside of
the  Company's control.  The Company's estimates are subject to change. Actual
results  experienced  by  the Company may differ from the Company's estimates.
The  Company  assumes no obligation to update such estimates to reflect actual
results,  changes  in  assumptions  or changes in other factors affecting such
estimates.






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                                      33

<PAGE>
                         Part II.  Other Information

Item  1.    Legal  Proceedings

     In  February  1995,  thirty-nine  class action antitrust cases were filed
against  seven  air  carriers, including USAir, on behalf of travel agents and
the  American  Society of Travel Agents in connection with the imposition of a
cap  on  commissions paid to travel agents  for ticket sales.  On September 3,
1996,  USAir  entered  into  a  settlement agreement with the plaintiffs under
which  USAir  agreed  to pay $9.8 million without any change in its commission
policy  and  without  any  admission  of  liability  or  wrongdoing. All other
defendant air carriers also settled. An order granting preliminary approval of
the settlements was issued on September 9, 1996 and notices of the settlements
have  been  distributed  to  plaintiff  class  members.  A fairness hearing to
determine  whether the settlements should be finally approved is scheduled for
November  15,  1996.

     On  September  19,  1996,  USAir paid approximately $119,056 into various
escrow  accounts  pursuant  to  the terms of a Consent Decree it entered into,
along  with several other companies, in an environmental action brought by the
United  States  for  cleanup of a superfund site in Moira, New York. USAir has
now  substantially  complied  with  its  obligations under the Consent Decree.

     USAir  has  reached  an  agreement  in  principle  with  Massport  to pay
approximately  $300,000  in  cash,  and  to  undertake  certain  remedial
activities in connection with its operations of the hydrant fuel system and
associated airport fueling operations in the vicinity of Terminal B at
Boston's Logan International Airport.  Massport has claims pending with all
tenants at the airport.  To date, several other carriers have settled their
claims.

Item 3. Defaults Upon Senior Securities

     On October 25, 1996, the Company paid dividends of $40.0 million on its
outstanding Senior Preferred Stock.  The Company also paid dividends of $43.0
million on its outstanding Senior Preferred Stock during August 1996.  Prior
to the August 1996 dividend payment, the Company had deferred the payment of
dividends on all of its outstanding preferred stock issuances effective with
dividend payments due September 30, 1994.

     The Company's capital surplus as of September 30, 1996, as calculated in
accordance with Delaware General Corporation Law based on the Company's
Condensed Consolidated Balance Sheets (which are contained in Part I, Item 1A
of this report), was $33.1 million.  This surplus amount is after the effect
of the October dividend payment, which was accrued for payment as of
September 30, 1996.  The Company's outstanding Series B Preferred Stock is
junior to the Company's Senior Preferred Stock and is not eligible to receive
dividends until the deferred dividends on the Senior Preferred Stock are paid
in full and all Senior Preferred Stock dividend payments are current.  There
can be no assurance of when or if the Company's Board of Directors will
declare additional dividends on the Company's outstanding capital stock.

                                     34

<PAGE>
     The redemption value of the Series A Preferred Stock at September 30,
1996 was $417.2 million (face amount of $358.0 million plus deferred 
dividends and interest thereon of $59.2 million).  The redemption values of
the Series F and Series T Preferred Stock at September 30, 1996 were $331.4
million (face amount of $300.0 million plus deferred dividends and interest
thereon of $31.4 million) and $110.0 million (face amount of $100.7 million
plus deferred dividends and interest thereon of $9.3 million), respectively.
The liquidation preference of the Series B Preferred Stock was $250.5 million
(face amount of $213.2 million plus deferred dividends of $37.3 million) at
September 30, 1996.  The aformention redemption values/liquidation preference
are as of September 30, 1996, and therefore do not reflect the October 1996
dividend payment.

     The outstanding issues of preferred stock are the:  Series A Preferred
Stock owned by affiliates of Berkshire Hathaway, Inc.; Series F Preferred
Stock and Series T Preferred Stock both owned by an affiliate of British
Airways Plc; and the Series B Preferred Stock which is publicly held.

Item 5. Other Information

     On April 25, 1996, the International Association of Machinists and 
Aerospace Workers ("IAM") and the Communications Workers of America ("CWA")
filed applications with the National Mediation Board ("NMB") requesting that
an election be held among USAir's passenger service employees, a class or
craft of approximately 10,000 workers, seeking to unionize this group of
employees.  On November 12, 1996, the NMB issued a decision holding that the
CWA, but not the IAM, had submitted a sufficient number of authorization
cards to warrant an election.  USAir is proceeding with the election process
and cannot predict the outcome of the election.

Item 6. Exhibits and Reports on Form 8-K

A. Exhibits

Designation                           Description

  11        Computation of Primary and Fully-Diluted Earnings Per Share for
            the three months and nine months ended September 30, 1996 and
            1995 for USAir Group, Inc.

  27.1      Financial Data Schedule - USAir Group, Inc.

  27.2      Financial Data Schedule - USAir, Inc.

  99        Select Airline Operating and Financial Statistics for the three
            months and nine months ended September 30, 1996 and 1995 for
            USAir, Inc.

                                     35
<PAGE>

B. Reports on Form 8-K

Date of Report                     Subject of Report

October 21, 1996     News Release dated October 21, 1996 of USAir Group, Inc.
                     and USAir, Inc., with consolidated statements of
                     operations for both companies for the three months and
                     nine months ended September 30, 1996 and 1995 and select
                     operating and financial statistics for USAir, Inc. for
                     the same periods.

October 24, 1996     News Release dated October 24, 1996 of USAir Group, Inc.
                     and USAir, Inc., announcing USAir's notice to British
                     Airways Plc that USAir was terminating its Code Share
                     Agreement with British Airways Plc effective as of March
                     29, 1997.






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                                      36

<PAGE>
                                Signatures

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.


                                  USAir Group, Inc.
                                  (Registrant)


Date:  November 13, 1996          By: /s/ James A. Hultquist
                                      ----------------------
                                      James A. Hultquist
                                      Controller
                                      (Principal Accounting Officer)


                                  USAir, Inc.
                                  (Registrant)


Date:  November 13, 1996          By: /s/ James A. Hultquist
                                      ----------------------
                                      James A. Hultquist
                                      Controller
                                      (Principal Accounting Officer)









                                  37