8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 9, 2006

US AIRWAYS GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-8444	54-1194634
(State of jurisdiction)	(Commission File No.)	(IRS Employer Identification No.)

111 West Rio Salado Parkway
Tempe, Arizona 85281
(Address of principal executive offices and zip code)

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

US AIRWAYS, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-8442	53-0218143
(State of jurisdiction)	(Commission File No.)	(IRS Employer Identification No.)

111 West Rio Salado Parkway
Tempe, Arizona 85281
(Address of principal executive offices and zip code)

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

AMERICA WEST AIRLINES, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-12337	86-0418245
(State of jurisdiction)	(Commission File No.)	(IRS Employer Identification No.)

4000 E. Sky Harbor Boulevard
Phoenix, Arizona 85034-3899
(Address of principal executive offices and zip code)

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
	240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

     On May 9, 2006 US Airways Group, Inc. (the “Company”) announced via press release the Company’s results for the three months ended March 31, 2006 and conducted a publicly-available conference call discussing those results. A copy of the Company’s press release is furnished pursuant to Item 2.02 as Exhibit 99.1 to this Current Report on Form 8-K.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

     (c) Exhibits.

Exhibit No.	Description
99.1	Press Release, dated May 9, 2006.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, US Airways Group, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	US Airways Group, Inc.
Dated: May 9, 2006	By:	/s/ Derek J. Kerr
		Derek J. Kerr
		Senior Vice President and
		Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, US Airways, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	US Airways, Inc.
Dated: May 9, 2006	By:	/s/ Derek J. Kerr
		Derek J. Kerr Senior Vice President and Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, America West Airlines, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	America West Airlines, Inc.
Dated: May 9, 2006	By:	/s/ Derek J. Kerr
		Derek J. Kerr
		Senior Vice President and
		Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated May 9, 2006.

EX-99.1

Exhibit 99.1

Contact: Elise Eberwein
480/693-5574

FOR IMMEDIATE RELEASE

US AIRWAYS GROUP, INC. REPORTS PROFITABLE
FIRST QUARTER 2006

Highlights of the new US Airways Group, Inc. first quarter 2006 results before the cumulative effect of a change in accounting principle:

• First quarter 2006 profit of $64 million or $0.75 per diluted share.

• Excluding special items, first quarter 2006 profit of $5 million or $0.05 per diluted share.

• As of March 31, 2006, the Company had $2.6 billion in total cash and investments, of which $1.6 billion was unrestricted.

TEMPE, Ariz., May 9, 2006 — The new US Airways Group, Inc. (NYSE: LCC) today reported a first quarter 2006 profit before the cumulative effect of a change in accounting principle of $64 million or $0.75 per diluted share. This compares to a profit before the cumulative effect of a change in accounting principle of $28 million or $1.29 per diluted share for the same period last year. Results for the new US Airways Group’s first quarter 2006 are being compared to America West’s standalone results for first quarter 2005 due to the former US Airways Group and America West Holdings Corporation merger on Sept. 27, 2005. Although the merger was structured so that America West became a wholly owned subsidiary of the new US Airways Group, America West was treated as the acquiring company for accounting purposes under Statement of Financial Accounting Standards No. 141 “Business Combinations.”

US Airways Group’s first quarter 2006 results include a $90 million gain associated with the forgiveness by Airbus of a Company loan, which represents the return of certain aircraft deposits previously paid to Airbus as restructuring fees in conjunction with the merger. In addition, the Company recognized a $26 million unrealized gain related to the airline’s fuel hedges. These gains were offset in part by $46 million of merger-related transition expenses and $11 million of costs incurred in connection with the extinguishment of certain debt instruments as part of the loan refinancing completed with GE Commercial Finance on March 31, 2006. The Company also recognized a $1 million gain from the cumulative effect of a change in accounting principle upon the adoption of SFAS No. 123R, “Share-Based Payment.” Excluding these special items, the Company reported a first quarter 2006 profit of $5 million or $0.05 per diluted share versus a loss

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excluding special items of $16 million or $1.09 per diluted share in the first quarter of 2005. See the accompanying notes in the Financial Tables section of this press release for a reconciliation of Generally Accepted Accounting Principles (GAAP) financial information to non-GAAP financial information.

US Airways Group Chairman, President and CEO Doug Parker stated, “We are extremely pleased to post a profitable first quarter. We couldn’t be more proud of our 35,000 employees who are doing a wonderful job of integrating our two airlines and taking care of our customers.

“While we recognize we are early in the integration process and we have much work yet to do, these results highlight the tremendous value we have achieved through the merger of US Airways and America West. Unit revenues were up significantly at both airlines as our customers experienced the value of our expanded network. While fuel prices remain an industry problem, the merger synergies are allowing us to keep our non-fuel related costs in line. With our merger we set out to build an airline that could be profitable in an extremely challenging environment and today’s results confirm that our outstanding employees are making that goal a reality.

“Looking forward we anticipate a very strong spring and summer and now expect to be profitable for the full year 2006, even after accounting for merger related expenses and with continued high fuel costs.”

Revenue and Cost Comparisons

The revenue environment during the first quarter 2006 showed considerable improvement over the same period in 2005. For the America West standalone network, total revenue per available seat mile (RASM) increased 16.2 percent during the first quarter 2006 to 10.27 cents while mainline yields increased 13.2 percent to 11.52 cents as compared to the same period last year. For the US Airways standalone network, RASM increased 27.7 percent to 13.34 cents while US Airways mainline yields increased 19.0 percent to 13.97 cents as compared to the same period last year.

Continued high fuel prices led to material cost increases for the new US Airways Group. Had fuel price per gallon remained constant for mainline and Express versus the first quarter 2005, US Airways Group’s first quarter 2006 operating expenses would have been $183 million lower. On a standalone basis, America West’s mainline operating costs per available seat mile (CASM) increased 11.2 percent to 8.76 cents for the first quarter 2006, largely driven by a 37.3 percent increase in the price of fuel from $1.42 to $1.95 per gallon. Excluding fuel and special items, America West’s mainline CASM increased 4.2 percent from 6.45 cents for the first quarter 2005 to 6.72 cents for the first quarter 2006 on a 1.4 percent decrease in available seat miles (ASMs). US Airways standalone mainline CASM during the first quarter 2006 increased 8.8 percent to 11.44 cents, primarily driven by the increased price of fuel. Excluding fuel and special items, US Airways’ standalone mainline CASM increased 4.3 percent to 8.42 cents for the first quarter 2006 on a 16.3 percent decrease in ASMs.

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Liquidity

As of March 31, 2006, the Company had $2.6 billion in total cash and investments, of which $1.6 billion was unrestricted. US Airways completed a $1.1 billion refinancing in the first quarter, which was used to replace approximately $1.1 billion of outstanding debt at lower interest rates and with an extended amortization period. The refinancing transaction was subsequently upsized to $1.25 billion in April 2006.

Summary of Integration Progress

The Company’s integration efforts remain on track. The following list includes a summary of integration progress the Company has achieved since closing the merger between America West Holdings and US Airways Group last September 2005.

Operations

• Achieved the top ranking in on-time performance among all major airlines as reported by the Department of Transportation (DOT) for the fourth quarter 2005 and the first quarter 2006.

• Consolidated operations at the 30 airports where both airlines operated prior to the merger (seven airports remain to be integrated).

• Signed an amended agreement with Embraer, agreeing to place an initial firm order for 25 Embraer 190 aircraft and an additional firm order for 32 Embraer 190 aircraft with options for up to 50 additional aircraft.

Finance

• In April, completed a $1.25 billion refinancing, which was used to replace approximately $1.1 billion of outstanding debt at lower interest rates and with an extended amortization period.

• In April, announced redemption of approximately $112 million in principal amount of America West Holdings Corporation’s 7.50 percent convertible senior notes due 2009. These notes were converted into approximately 3.9 million shares of common stock.

• Combined all insurance programs for the new airline, which is anticipated to save an additional $41 million annually.

Marketing

• Added numerous fares in several east coast markets including Philadelphia, Charlotte, Pittsburgh and New York/LaGuardia.

• Released new US Airways Vacations web site with improved functionality and eliminated the America West Vacations brand.

• Established Dividend Miles as the new Company’s frequent flyer program, and created mechanisms for reciprocal benefits, accrual and redemption.

• Introduced a new affinity card with Barclays Bank.

• Announced three new European destinations, Lisbon, Milan and Stockholm, which will begin service this summer.

• Integrated certain inflight services, including the inflight magazine, entertainment and level-off and safety videos.

Labor Relations

• Reached a Transition Agreement with the airline’s pilots and flight attendants.

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• Reached a Transition Agreement with a new labor alliance between the Communication Workers Association and the International Brotherhood of Teamsters, which represents the airline’s customer service employees.

• Received single carrier certification by the National Mediation Board (NMB), and recently received notice that the NMB will hold an election in order to achieve single representation for the combined airline’s fleet service workers.

• Recalled 55 furloughed US Airways pilots and up to 510 US Airways flight attendants.

• Began bringing some of the currently outsourced reservations work back in house by increasing hiring in Winston-Salem, North Carolina and Reno, Nevada.

Culture

• Paid out six consecutive monthly bonuses to employees below officer level for achieving on-time performance goals in October 2005 through March 2006 (totaling approximately $10 million).

• Implemented new internal communication programs designed to ensure senior management visibility among all areas of the combined airline’s operation.

• Unveiled the first of five heritage planes that will feature throwback liveries of the four major airlines that comprise the new US Airways (Allegheny, America West, Piedmont and PSA).

• Began an aggressive leadership development training program that will ultimately touch all leaders at US Airways Group.

Analyst Conference Call/Webcast Details

US Airways will conduct a live audio webcast of its earnings call today at 12:30 p.m. EDT, which will be available to the public on a listen-only basis at www.usairways.com and www.americawest.com under the Public/Investor Relations tab. An archive of the call/webcast will be available in the Public/Investor Relations portion of both Web sites through June 9, 2006.

The airline also updated its investor relations guidance on its web sites (www.usairways.com and www.americawest.com <http://www.americawest.com>). Information updated includes cost per available seat mile (CASM) excluding fuel and transition expenses, fuel prices and hedging positions, estimated interest expense/income and merger related transition expense guidance. The investor relations update page also includes the airline’s capacity, fleet plan for 2006 and estimated capital spending for 2006.

About US Airways

US Airways and America West’s recent merger creates the fifth largest domestic airline employing nearly 35,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,800 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. This press release and additional information on US Airways can be found at www.usairways.com or www.americawest.com. (LCCF)

Star Alliance was established in 1997 as the first truly global airline alliance to offer customers worldwide reach and a smooth travel experience. Star Alliance was voted Best Airline Alliance by Skytrax in 2003 and 2005. The members are Air Canada, Air New Zealand, ANA, Asiana Airlines, Austrian, bmi, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Singapore Airlines, South African Airways, Spanair, SWISS, TAP

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Portugal, THAI, United, US Airways and VARIG Brazilian Airlines. Regional member carriers Adria Airways (Slovenia), Blue1 (Finland) and Croatia Airlines enhance the global network. Overall, Star Alliance offers more than 15,500 daily flights to 842 destinations in 152 countries.

Certain of the statements contained herein should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “could,” “should,” and “continue” and similar terms used in connection with statements regarding the outlook of US Airways Group, Inc. (the Company), expected fuel costs, the revenue and pricing environment, and expected financial performance. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving America West Holdings and US Airways Group, including future financial and operating results, the combined companies’ plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties that could cause the Company’s actual results and financial position to differ materially from these statements. Such risks and uncertainties include, but are not limited to, the following: the ability of the Company to obtain and maintain any necessary financing for operations and other purposes (including compliance with financial covenants); the ability of the Company to maintain adequate liquidity; the impact of changes in fuel prices; the impact of economic conditions; changes in prevailing interest rates; the ability to attract and retain qualified personnel; the ability of the Company to attract and retain customers; the ability of the Company to obtain and maintain commercially reasonable terms with vendors and service providers; the cyclical nature of the airline industry; competitive practices in the industry, including significant fare restructuring activities by major airlines; labor costs; security-related and insurance costs; weather conditions; government legislation and regulation; relations with unionized employees generally and the impact and outcome of the labor negotiations; the impact of global instability including the potential impact of current and future hostilities, terrorist attacks, infectious disease outbreaks or other global events; the impact of the resolution of remaining claims in US Airways Group’s Chapter 11 proceedings; the ability of the Company to fund and execute its business plan following the Chapter 11 proceedings and the merger; and other risks and uncertainties listed from time to time in the companies’ reports to the SEC. There may be other factors not identified above of which the Company is not currently aware that may affect matters discussed in the forward-looking statements, and may also cause actual results to differ materially from those discussed. The Company assumes no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law. Additional factors that may affect the future results of the Company are set forth in the section entitled “Risk Factors” in the Company’s Quarterly report on Form 10-Q for the quarter ended March 31, 2006 and in the filings of the Company with the SEC, which are available at www.usairways.com and www.americawest.com.

Financial Tables to Follow

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US Airways Group, Inc.
Condensed Consolidated Statements of Operations
(in millions except share and per share amounts)
(unaudited)

	3 Months Ended			3 Months Ended
	March 31, 2006			March 31, 2005
Operating revenues
Mainline passenger	$	1,811		$	577
Express passenger		611			103
Cargo		37			9
Other		189			44
Total operating revenues		2,648			733
Operating expenses
Aircraft fuel and related taxes		555			160
Gain on fuel hedging instruments, net:
Realized		(2	)		(11	)
Unrealized		(26	)		(49	)
Salaries and related costs		503			175
Express expenses
Fuel		172			32
Other		443			79
Aircraft rent		185			77
Aircraft maintenance		141			53
Other rent and landing fees		129			42
Selling expenses		107			36
Special items, net		(44	)		1
Depreciation and amortization		45			12
Other		315			81
Total operating expenses		2,523			688
Operating income		125			45
Nonoperating income (expenses)
Interest income		26			2
Interest expense, net		(75	)		(19	)
Other, net		(12	)		—
Nonoperating expenses, net		(61	)		(17	)
Income before income taxes and cumulative effect of change in accounting principle		64			28
Income tax provision		—			—
Income before cumulative effect of change in accounting principle		64			28
Cumulative effect of change in accounting principle		1			(202	)
Net income (loss)	$	65		$	(174	)
Income per share before cumulative effect of change in accounting principle:
Basic	$	0.79		$	1.90
Diluted	$	0.75		$	1.29
Net income (loss) per share:
Basic	$	0.80		$	(11.70	)
Diluted	$	0.76		$	(6.58	)
Shares used for computation (in thousands):
Basic		81,679			14,849
Diluted		93,362			25,666

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US Airways Group, Inc.
Operating Statistics

	3 Months Ended		3 Months Ended
	March 31, 2006		March 31, 2005
Mainline
Revenue passenger miles (in millions)		13,956		5,671
Available seat miles (ASM) (in millions)		18,230		7,301
Passenger load factor (percent)		76.6		77.7
Yield (cents)		12.97		10.18
Passenger revenue per ASM (cents)		9.93		7.90
Passenger enplanements (in thousands)		13,591		5,172
Aircraft (end of period)		367		138
Operating cost per ASM (cents)		10.47		7.90
Operating cost per ASM excluding special items (cents)		10.85		8.51
Operating cost per ASM excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net (cents)		7.82		6.47
Express
Revenue passenger miles (in millions)		2,431		699
Available seat miles (in millions)		3,659		981
Passenger load factor (percent)		66.4		71.3
Passenger revenue per ASM (cents)		16.71		10.54
Operating cost per ASM (cents)		16.82		11.31
Operating cost per ASM excluding aircraft fuel (cents)		12.12		8.02
TOTAL — Mainline & Express
Revenue passenger miles (in millions)		16,387		6,370
Available seat miles (in millions)		21,889		8,282
Passenger load factor (percent)		74.9		76.9
Passenger revenue per ASM (cents)		11.06		8.22
Total revenue per ASM (cents)		12.10		8.84
Operating cost per ASM (cents)		11.53		8.30

*** Express includes US Airways Group’s wholly owned regional airline subsidiaries, Piedmont Airlines and PSA Airlines, US Airways’ MidAtlantic regional jet division as well as operating and financial results from capacity purchases agreements with Mesa Airlines, Chautauqua Airlines, Air Wisconsin Airlines and Republic Airlines.

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Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gains on Fuel Hedging instruments, Net — Mainline only

US Airways Group, Inc. (the Company) is providing disclosure of the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The Company believes that the non-GAAP financial measures provide investors the ability to measure financial performance excluding special items which is more indicative of the Company’s ongoing performance and is more comparable to measures reported by other major airlines. The Company believes that the presentation of mainline CASM excluding fuel and gains or losses on fuel hedging instruments is useful to investors as both the cost and availability of fuel are subject to many economic and political factors beyond the Company’s control.

	3 Months Ended			3 Months Ended
	March 31, 2006			March 31, 2005
	(in millions)
Reconciliation of Income before Cumulative Effect of Change in Accounting Principle Excluding Special items for US Airways Group, Inc.
Income before cumulative effect of change in accounting principle as reported	$	64		$	28
Special items
Unrealized gains on fuel hedging instruments, net (1)		(26	)		(49	)
Special items, net (2)		(44	)		1
Other special charges (3) (6)		11			4
Income (loss) before cumulative effect of change in accounting principle, as adjusted for special items	$	5		$	(16	)
Weighted average common shares outstanding (in thousands):
Basic		81,679			14,849
Diluted		83,542			14,849
Income (loss) per share before cumulative effect of change in accounting principle, as adjusted for special items
Basic	$	0.06		$	(1.09	)
Diluted	$	0.05		$	(1.09	)
Reconciliation of Income before Cumulative Effect of Change in Accounting Principle Excluding Special items for America West Airlines, Inc.
Income before cumulative effect of change in accounting principle as reported	$	57		$	29
Special items:
Unrealized gains on fuel hedging instruments, net (1)		(26	)		(49	)
Special items, net (4)		(30	)		1
Other special charges (3) (6)		11			4
Income (loss) before cumulative effect of change in accounting principle, as adjusted for special items	$	12		$	(15	)
Reconciliation of Net Income (Loss) Excluding Special items for US Airways, Inc.
Net income (loss) as reported	$	—		$	(259	)
Special items:
Special items, net (5)		(15	)		—
Reorganization items, net (7)		—			2
Net loss, as adjusted for special items	$	(15	)	$	(257	)

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Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gains on Fuel Hedging instruments, Net — Mainline only

	3 Months Ended			3 Months Ended
	March 31, 2006			March 31, 2005
Reconciliation of Operating Cost per ASM Excluding Special Items, Fuel, Realized Gains on Fuel Hedging instruments, Net — Mainline only
US Airways Group, Inc.
(in millions)
Total operating expenses	$	2,523		$	688
Less Express expenses:
Fuel		(172	)		(32	)
Other		(443	)		(79	)
Total mainline operating expenses		1,908			577
Special items
Unrealized gains on fuel hedging instruments, net (1)		26			49
Special items, net (2)		44			(1	)
Other special charges (6)		—			(4	)
Mainline operating expenses, excluding special items		1,978			621
Aircraft fuel		(555	)		(160	)
Realized gains on fuel hedging instruments, net		2			11
Mainline operating expenses, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net	$	1,425		$	472
(in cents)
Mainline operating expenses per ASM		10.47			7.90
Special items per ASM
Unrealized gains on fuel hedging instruments, net (1)		0.14			0.67
Special items, net (2)		0.24			(0.01	)
Other special charges (6)		—			(0.05	)
Mainline operating expenses per ASM, excluding special items		10.85			8.51
Aircraft fuel		(3.04	)		(2.19	)
Realized gains on fuel hedging instruments, net		0.01			0.15
Mainline operating expenses per ASM, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net		7.82			6.47

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Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gains on Fuel Hedging instruments, Net — Mainline only

	3 Months Ended			3 Months Ended
	March 31, 2006			March 31, 2005
America West Airlines Inc.
(in millions)
Total operating expenses	$	776		$	687
Less Express expenses:
Fuel		(46	)		(32	)
Other		(99	)		(79	)
Total mainline operating expenses		631			576
Special items:
Unrealized gains on fuel hedging instruments, net (1)		26			49
Special items, net (4)		30			(1	)
Other special charges (6)		—			(4	)
Mainline operating expenses, excluding special items		687			620
Aircraft fuel		(205	)		(160	)
Realized gains on fuel hedging instruments, net		2			11
Mainline operating expenses, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net	$	484		$	471
(in cents)
Mainline Operating expenses per ASM		8.76			7.88
Special items per ASM:
Unrealized gains on fuel hedging instruments, net (1)		0.36			0.67
Special items, net (4)		0.42			(0.01	)
Other special charges (6)		—			(0.05	)
Mainline operating expenses per ASM, excluding special items		9.54			8.49
Aircraft fuel		(2.85	)		(2.19	)
Realized gains on fuel hedging instruments, net		0.03			0.15
Mainline operating expenses per ASM, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net		6.72			6.45
US Airways, Inc.
(in millions)
Total operating expenses	$	1,761		$	1,804
Less: Express expenses		(499	)		(419	)
Total mainline operating expenses		1,262			1,385
Special items:
Special items, net (5)		15			—
Mainline operating expenses, excluding special items		1,277			1,385
Aircraft fuel		(349	)		(321	)
Mainline operating expenses, excluding special items and aircraft fuel	$	928		$	1,064
(in cents)
Mainline operating expenses per ASM (excluding Express expenses)		11.44			10.51
Special items per ASM:
Special items, net (5)		0.14			—
Mainline operating expenses per ASM, excluding special items		11.58			10.51
Aircraft fuel		(3.16	)		(2.44	)
Mainline operating expenses per ASM excluding special items and aircraft fuel		8.42			8.07

Note: Amounts may not recalculate due to rounding.

10

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gains on Fuel Hedging instruments, Net — Mainline only

FOOTNOTES:

1) The 2006 period includes a $26 million unrealized gain and the 2005 period includes a $49 million unrealized gain, resulting from mark-to-market accounting for changes in the fair value of AWA’s fuel hedging instruments.

2) The 2006 period includes a $90 million gain associated with the return of equipment deposits upon forgiveness of a loan and $46 million of merger related transition expenses. The 2005 period includes $1 million of charges related to aircraft removed from service.

3) The 2006 period includes $6 million of prepayment penalties and $5 million write-off of debt issue costs incurred with the extinguishment of debt in connection with the $1.25 billion debt refinancing.

4) The 2006 period includes a $51 million gain associated with the return of equipment deposits upon forgiveness of a loan, and $21 million of merger related transition expenses. The 2005 period includes $1 million of charges related to aircraft removed from service.

5) The 2006 period includes a $40 million gain associated with the return of equipment deposits upon forgiveness of a loan, and $25 million of merger related transition expenses.

6) The first quarter of 2005 includes $4 million loss on the sale-leaseback of one new Airbus A320 aircraft acquired during the period.

7) During the first quarter of 2005, US Airways recognized $2 million in reorganization items incurred as a direct result of its Chapter 11 filing. This expense includes $95 million of severance and benefits, a $91 million adjustment to the minimum pension liability, $15 million in professional fees, $8 million in damage and deficiency claims on rejected aircraft, $2 million in aircraft order penalties, partially offset by $207 million in gains related to the curtailment of US Airways’ defined benefit plans and other postretirement medical benefits and $2 million in interest on accumulated cash.

11

America West Airlines, Inc.
Consolidated Statements of Operations
(in millions)
(unaudited)

	3 Months Ended			3 Months Ended			Percent
	March 31, 2006			March 31, 2005			Change
Operating revenues
Mainline passenger	$	652		$	577			13.0
Express passenger		153			103			48.5
Cargo		9			9			—
Other		45			44			2.3
Total operating revenues		859			733			17.2
Operating expenses
Aircraft fuel and related taxes		205			160			28.1
Gain on fuel hedging instruments, net:
Realized		(2	)		(11	)		(81.8	)
Unrealized		(26	)		(49	)		(46.9	)
Salaries and related costs		174			175			(0.6	)
Express expenses
Fuel		46			32			43.8
Other		99			79			25.3
Aircraft rent		86			77			11.7
Aircraft maintenance		52			53			(1.9	)
Other rent and landing fees		45			42			7.1
Selling expenses		39			36			8.3
Special items, net		(30	)		1			—
Depreciation and amortization		11			12			(8.3	)
Other		77			80			(3.8	)
Total operating expenses		776			687			13.0
Operating income		83			46			80.4
Nonoperating income (expenses)
Interest income		13			3			—
Interest expense, net		(28	)		(21	)		33.3
Other, net		(11	)		1			—
Nonoperating expenses, net		(26	)		(17	)		52.9
Income before income taxes and cumulative effect of change of accounting principle		57			29			96.6
Income taxes		—			—			—
Income before cumulative effect of change in accounting principle		57			29			96.6
Cumulative effect of change in accounting principle		1			(202	)		—
Net income (loss)	$	58		$	(173	)		—

12

America West Airlines, Inc.
Operating Statistics

	3 Months Ended		3 Months Ended		Percent
	March 31, 2006		March 31, 2005		Change
Mainline
Revenue passenger miles (in millions)		5,660		5,671		(0.2	)
Available seat miles (ASM) (in millions)		7,199		7,301		(1.4	)
Passenger load factor (percent)		78.6		77.7		0.9	pts
Yield (cents)		11.52		10.18		13.2
Passenger revenue per ASM (cents)		9.05		7.90		14.6
Passenger enplanements (in thousands)		5,091		5,172		(1.6	)
Aircraft (end of period)		143		138		3.6
Block hours		133,970		136,497		(1.9	)
Average stage length (miles)		1,027		1,022		0.5
Average passenger journey (miles)		1,578		1,624		(2.8	)
Fuel consumption (gallons in millions)		105.2		107.2		(1.9	)
Average fuel price (dollars per gallon)		1.95		1.42		37.3
Average fuel price including realized gains on fuel hedging instruments, net (dollars)		1.93		1.39		38.8
Full-time equivalent employees (end of period)		12,828		12,417		3.3
Operating cost per ASM (cents)		8.76		7.88		11.2
Operating cost per ASM excluding special items (cents)		9.54		8.49		12.4
Operating cost per ASM excluding special items, fuel and realized gains on fuel hedging instruments, net (cents)		6.72		6.45		4.2
Express
Revenue passenger miles (in millions)		847		699		21.2
Available seat miles (in millions)		1,167		981		19.0
Passenger load factor (percent)		72.6		71.3		1.3	pts
Passenger revenue per ASM (cents)		13.14		10.54		24.7
Passenger enplanements (in thousands)		1,639		1,199		36.7
Operating cost per ASM (cents)		12.45		11.32		10.0
Total
Revenue passenger miles (in millions)		6,507		6,370		2.2
Available seat miles (in millions)		8,366		8,282		1.0
Passenger load factor (percent)		77.8		76.9		0.9	pts
Total revenue per ASM (cents)		10.27		8.84		16.2
Passenger enplanements (in thousands)		6,730		6,371		5.6
Operating cost per ASM (cents)		9.28		8.29		11.9

13

US Airways, Inc.
Statements of Operations
(in millions)
(unaudited)

	Successor Company			Predecessor Company
	3 Months Ended			3 Months Ended			Percent
	March 31, 2006			March 31, 2005			Change
Operating revenues
Mainline passenger	$	1,159		$	1,133			2.3
Express passenger		458			314			45.9
Cargo		29			21			38.1
Other		158			154			2.6
Total operating revenues		1,804			1,622			11.2
Operating expenses
Aircraft fuel and related taxes		349			321			8.7
Salaries and related costs		329			408			(19.4	)
Express expenses		499			419			19.1
Aircraft rent		99			98			1.0
Aircraft maintenance		90			72			25.0
Other rent and landing fees		84			89			(5.6	)
Selling expenses		67			93			(28.0	)
Special items, net		(15	)		—			—
Depreciation and amortization		36			50			(28.0	)
Other		223			254			(12.2	)
Total operating expenses		1,761			1,804			(2.4	)
Operating income (loss)		43			(182	)		—
Nonoperating income (expenses)
Interest income		14			3			—
Interest expense, net		(55	)		(75	)		(26.7	)
Reorganization items, net		—			(2	)		—
Other, net		(2	)		(3	)		(33.3	)
Total nonoperating expenses, net		(43	)		(77	)		(44.2	)
Income (loss) before income taxes		—			(259	)		—
Income tax provision		—			—			—
Net income (loss)	$	—		$	(259	)		—

14

US Airways, Inc.
Operating Statistics

	3 Months Ended		3 Months Ended		Percent
	March 31, 2006		March 31, 2005		Change
Mainline
Revenue passenger miles (in millions)		8,296		9,646		(14.0	)
Available seat miles (ASM) (in millions)		11,031		13,186		(16.3	)
Passenger load factor (percent)		75.2		73.2		2.0	pts
Yield (cents)		13.97		11.74		19.0
Passenger revenue per ASM (cents)		10.50		8.59		22.2
Passenger enplanements (in thousands)		8,500		10,253		(17.1	)
Aircraft (end of period)		224		279		(19.7	)
Block hours		192,921		247,053		(21.9	)
Average stage length (miles)		827		780		6.0
Average passenger journey (miles)		976		941		3.7
Fuel consumption (gallons in millions)		182.3		218.2		(16.5	)
Average fuel price (dollars per gallon) with related taxes		1.92		1.47		30.6
Full-time equivalent employees (end of period)		19,255		23,696		(18.7	)
Operating cost per ASM (cents)		11.44		10.51		8.8
Operating cost per ASM excluding special items(cents)		11.58		10.51		10.2
Operating cost per ASM excluding special items and fuel (cents)		8.42		8.07		4.3
Express
Revenue passenger miles (in millions)		1,584		1,402		13.0
Available seat miles (in millions)		2,492		2,334		6.8
Passenger load factor (percent)		63.6		60.1		3.5	pts
Passenger revenue per ASM (cents)		18.38		13.45		36.7
Passenger enplanements (in thousands)		4,269		3,815		11.9
Operating cost per ASM (cents)		20.02		17.95		11.5
TOTAL — Mainline & Express
Revenue passenger miles (in millions)		9,880		11,048		(10.6	)
Available seat miles (in millions)		13,523		15,520		(12.9	)
Passenger load factor (percent)		73.1		71.2		1.9	pts
Total revenue per ASM (cents)		13.34		10.45		27.7
Operating cost per ASM (cents)		13.02		11.62		12.0

15

US Airways Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)

	March 31, 2006			December 31, 2005
Assets
Current assets
Cash equivalents and short-term investments	$	1,598		$	1,577
Restricted cash		5			8
Accounts receivable, net		495			353
Materials and supplies, net		223			229
Prepaid expenses and other		477			392
Total current assets		2,798			2,559
Property and equipment, net
Flight equipment		1,991			1,920
Ground property and equipment		539			532
Less accumulated depreciation and amortization		(467	)		(431	)
		2,063			2,021
Equipment purchase deposits		40			43
Total property and equipment		2,103			2,064
Other assets
Goodwill		702			732
Other intangibles, net		575			583
Restricted cash		1,007			792
Other assets		235			234
Total other assets		2,519			2,341
Total assets	$	7,420		$	6,964
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of debt and capital leases	$	124		$	211
Accounts payable		535			530
Air traffic liability		1,243			788
Accrued compensation and vacation		178			209
Accrued taxes		240			171
Other accrued expenses		664			750
Total current liabilities		2,984			2,659
Noncurrent liabilities and deferred credits
Long-term debt and capital leases, net of current maturities		2,843			2,749
Deferred gains and credits		227			254
Employment benefit liabilities and other		869			882
Total noncurrent liabilities and deferred credits		3,939			3,885
Stockholders’ equity
Preferred stock		—			—
Common stock		1			1
Additional paid-in capital		1,270			1,258
Accumulated deficit		(761	)		(826	)
Treasury stock		(13	)		(13	)
Total stockholders’ equity		497			420
Total liabilities and stockholders’ equity	$	7,420		$	6,964

16