US Airways Group, Inc. Reports Significantly Improved Third Quarter Earnings


29 Okt 2007 [13:45h]     Bookmark and Share


US Airways Group, Inc. Reports Significantly Improved Third Quarter Earnings

US Airways Group, Inc. Reports Significantly Improved Third Quarter Earnings


US Airways Group, Inc. (NYSE: LCC) reported its third quarter 2007 results. Net profit for the third quarter was $177 million, or $1.87 per diluted share, compared to a net loss of $78 million, or ($0.88) per share for the same period last year.

Highlights of the US Airways Group, Inc. (the Company) third quarter 2007 results:

  • Net profit for the third quarter 2007 was $177 million, or $1.87 per diluted share versus a net loss of $78 million, or ($0.88) per share for the third quarter 2006.

  • Excluding special items, third quarter 2007 net profit was $185 million or $1.96 per diluted share versus a net profit of $101 million or $1.09 per share in 2006.

  • On a year to date basis, US Airways has accrued $55 million for its annual employee profit sharing program.

  • The Company had $3.1 billion in total cash and investments, of which $0.5 billion was restricted, on September 30, 2007.

TEMPE, Ariz., — Excluding net special items of $8 million, the Company reported a net profit of $185 million, or $1.96 per diluted share for its third quarter 2007. This compares to a net profit excluding special items of $101 million, or $1.09 per diluted share for the third quarter of 2006, which included $179 million of special items. 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.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050223/LAW097LOGO)

US Airways Group Chairman and CEO Doug Parker stated, „We are very pleased to report a sharp improvement in our third quarter earnings. Customer demand has kept pace with supply and the revenue environment has held up well in spite of the credit market challenges and economic uncertainty experienced during the quarter. We are particularly pleased to note that overall industry capacity has remained in check during this period of recovery for our industry, which is a notable change from the past.

„We are especially pleased with the improvement we’ve seen in operating reliability as the result of our operational improvement plan. During September 2007, more than 80 percent of our flights arrived on time and we completed 99 percent of our flights as scheduled. This was our best on-time performance so far in 2007 and the second best month since our merger in September 2005. We have begun the fourth quarter well and are optimistic that we are on track to regain our position as an industry leader in operational reliability.

„Also during the third quarter, we completed the merger of our operating certificates and US Airways now operates under a single operating certificate. This accomplishment reflects two years of effort on the part of many employees to combine policies, procedures, flight operating systems and maintenance standards with the end goal to become one airline in the eyes of the Federal Aviation Administration (FAA). Our team did a fantastic job, and we applaud and recognize their accomplishment of making the cutover seamless for our passengers.

„These results are due to the great work of our 37,000 employees who remain committed to their airline while we complete our integration work and transition back to consistent operating fundamentals. As a result of their efforts, we are producing one of the top profit margins in our industry and have accrued $55 million year-to-date for our employee profit sharing program.

„Looking into the current quarter, demand remains robust and the yield environment also remains strong. Recent fuel price increases remain problematic, but so long as our industry continues its recent capacity restraint we are optimistic about prospects for 2008,“ concluded Parker.

Revenue and Cost Comparisons

Mainline passenger revenue per available seat mile (PRASM) was 10.85 cents, up 6.5 percent over the same period last year. Express PRASM was 19.31 cents, up 4.0 percent over the third quarter 2006. Total mainline and Express PRASM for US Airways Group was 12.15 cents, which was up 5.6 percent over the third quarter 2006 on a 2.9 decline in total available seat miles (ASMs).

Mainline cost per available seat mile (CASM) at US Airways Group was 11.11 cents, down 2.6 percent versus the same period last year on a decrease in mainline capacity of 2.4 percent versus the third quarter of 2006. Excluding fuel, unrealized and realized gains/losses on fuel hedging instruments, and merger related transition expenses, mainline CASM was 7.68 cents, up 5.7 percent from the same period last year.

Chief Financial Officer Derek Kerr stated, „Our increase in CASM excluding fuel and special items was largely associated with the implementation of our operational improvement plan. We also pulled capacity down slightly to help ease some of the northeast air traffic control issues and other operational challenges. Because of the short-term nature of this capacity reduction, we were not able to pull out all of the corresponding fixed costs and as a result, experienced an increase in unit costs during the third quarter.

„While clearly not satisfied with our cost performance during the third quarter, we took the steps necessary to improve our operational reliability. We have seen a significant improvement in our operation and anticipate the rate of increase in CASM (excluding fuel and special items) to be lower as we move forward.“

Liquidity

As of Sept. 30, 2007, the Company had $3.1 billion in total cash and investments, of which $0.5 billion was restricted.

Second Quarter Special Items

During its third quarter, the Company recognized $8 million of net special items. Expenses for the quarter included $17 million of merger-related transition expenses and $4 million of special non-cash state tax provision from the utilization of pre-acquisition net operating losses (NOL). These expenses were offset by a $13 million non-cash credit for unrealized net gains associated with the change in fair value of the Company’s outstanding fuel hedge contracts.

Other Notable Accomplishments

    Operations

  • Marked a significant milestone by obtaining a single operating certificate from the FAA. The single certificate allows US Airways to operate as a single airline with one set of policies, procedures, computer systems, maintenance and flight control systems.
  • Hired a new Chief Operating Officer (COO), Robert Isom, who has 15 years of airline experience and most recently served as Chief Restructuring Officer of GMAC, LLC. As COO, Isom oversees the airline’s operations, including flight operations, inflight services, maintenance and engineering, airport customer service, reservations, cargo and the Express operation.
  • For the ninth consecutive year, Charlotte’s line maintenance facility earned the FAA’s highest award for excellence in maintenance — the AMT Diamond Award.
  • The airline maintenance and reliability groups set a new V2500 engine operating hours performance record with the completion of more than 30,000 flight hours.
  • Announced plans to offer recall to all pilots furloughed by pre-merger US Airways, move some 140 pilots at regional partners as part of the jets for jobs program back to mainline, and hire an additional 350 pilots by the end of 2008.

    Marketing

  • Awarded the right to fly the first ever route between Philadelphia and the Chinese capital city of Beijing by the U.S. Department of Transportation (DOT). The daily service to China will begin in 2009. The flight will originate at the airline’s hub in Charlotte, N.C.
  • Announced new codeshare agreement with Air New Zealand, which gives passengers the ability to connect seamlessly between the United States, New Zealand, Australia, and the Pacific Islands from Los Angeles and San Francisco.
  • Launched a mobile-device friendly version of usairways.com allowing customers to search for flights, purchase tickets, check flight status, make changes to an existing reservation, and access their Dividend Miles account conveniently with a handheld mobile device.

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 http://www.usairways.com under the About US >> Investor Relations tab. An archive of the call/webcast will be available in the Public/Investor Relations portion of the Web site through Nov. 25, 2007.

The airline will also update its investor relations guidance on its Web site (http://www.usairways.com). Information that could be updated includes cost per available seat mile (CASM) excluding fuel and transition expenses, fuel prices and hedging positions, other revenues, estimated interest expense/income and merger related transition expense guidance. The investor relations update page also includes the airline’s capacity, fleet plan for 2007 and estimated capital spending for 2007.

About US Airways

US Airways is the fifth largest domestic airline employing nearly 37,000 aviation professionals worldwide. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,600 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. The new US Airways — the product of a merger between America West and US Airways in September 2005 — is a member of the Star Alliance network, which offers our customers 16,000 daily flights to 855 destinations in 155 countries worldwide. This press release and additional information on US Airways can be found at http://www.usairways.com. (LCCF)

Forward Looking Statements

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,“ „indicate,“ „anticipate,“ „believe,“ „forecast,“ „estimate,“ „plan,“ „guidance,“ „outlook,“ „could,“ „should,“ „continue“ and similar terms used in connection with statements regarding the outlook of US Airways Group, Inc. (the „Company“). Such statements include, but are not limited to, statements about expected fuel costs, the revenue and pricing environment, the Company’s expected financial performance and operations, future financing plans and needs, overall economic conditions and the benefits of the business combination transaction involving America West Holdings Corporation and US Airways Group, including future financial and operating results and the combined companies‘ plans, objectives, expectations and intentions. Other forward-looking statements that do not relate solely to historical facts include, without limitation, statements that discuss the possible future effects of current known trends or uncertainties or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. 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 the Company’s expectations. Such risks and uncertainties include, but are not limited to, the following: the impact of high fuel costs, significant disruptions in the supply of aircraft fuel and further significant increases to fuel prices; our high level of fixed obligations and our ability to obtain and maintain financing for operations and other purposes; our ability to achieve the synergies anticipated as a result of the merger and to achieve those synergies in a timely manner; our ability to integrate the management, operations and labor groups of US Airways Group and America West Holdings; labor costs and relations with unionized employees generally and the impact and outcome of labor negotiations; the impact of global instability, including the current instability in the Middle East, the continuing impact of the military presence in Iraq and Afghanistan and the terrorist attacks of September 11, 2001 and the potential impact of future hostilities, terrorist attacks, infectious disease outbreaks or other global events that affect travel behavior; reliance on automated systems and the impact of any failure or disruption of these systems; the impact of future significant operating losses; changes in prevailing interest rates; our ability to obtain and maintain commercially reasonable terms with vendors and service providers and our reliance on those vendors and service providers; security-related and insurance costs; changes in government legislation and regulation; our ability to use pre-merger NOLs and certain other tax attributes; competitive practices in the industry, including significant fare restructuring activities, capacity reductions and in court or out of court restructuring by major airlines; continued existence of prepetition liabilities; interruptions or disruptions in service at one or more of our hub airports; weather conditions; our ability to obtain and maintain any necessary financing for operations and other purposes; our ability to maintain adequate liquidity; our ability to maintain contracts that are critical to our operations; our ability to operate pursuant to the terms of our financing facilities (particularly the financial covenants); our ability to attract and retain customers; the cyclical nature of the airline industry; our ability to attract and retain qualified personnel; economic conditions; and other risks and uncertainties listed from time to time in our reports to the Securities and Exchange Commission. 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. All forward-looking statements are based on information currently available to the Company. The Company assumes no obligation to publicly update or revise any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such estimates. 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 period ended September 30, 2007, which is available at http://www.usairways.com.

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

                        3 Months  3 Months          9 Months  9 Months
                          Ended    Ended    Percent  Ended      Ended  Percent
                        September September Change  September September Change
                         30, 2007 30, 2006          30, 2007   30, 2006

    Operating revenues
        Mainline
         passenger         $2,133   $2,052     4.0    $6,233    $6,048    3.1
        Express passenger     692      703    (1.5)    2,039     2,095   (2.7)
        Cargo                  32       40   (19.7)      102       114  (10.1)
        Other                 179      173     2.9       550       514    6.8
        Total operating
         revenues           3,036    2,968     2.3     8,924     8,771    1.7

    Operating expenses
        Aircraft fuel and
         related taxes        692      719    (3.8)    1,900     1,943   (2.2)
        Loss (gain) on fuel
         hedging instruments,
         net:
             Realized         (20)       -      nm        17       (12)    nm
             Unrealized       (13)      88      nm      (128)       44     nm
        Salaries and
         related costs        555      529     5.1     1,659     1,574    5.4
        Express expenses:
             Fuel             199      210    (5.2)      539       585   (7.8)
             Other            450      443     1.4     1,382     1,345    2.8
        Aircraft rent         182      181     0.7       542       546   (0.7)
        Aircraft
         maintenance          144      142     1.4       479       432   10.7
        Other rent and
         landing fees         141      146    (4.0)      408       432   (5.6)
        Selling expenses      116      120    (3.4)      347       348   (0.3)
        Special items, net     17       27   (36.7)       83        18     nm
        Depreciation and
         amortization          47       42    11.9       137       132    3.9
        Other                 324      305     7.0       952       901    5.4
        Total operating
         expenses           2,834    2,952    (4.0)    8,317     8,288    0.3

        Operating income      202       16      nm       607       483   25.8

    Nonoperating income
     (expense)
        Interest income        43       45    (2.8)      131       111   18.4
        Interest expense,
         net                  (66)     (74)  (10.8)     (206)     (221)  (7.0)
        Other, net              2       (4)     nm       (11)      (14) (15.9)
        Total nonoperating
         expense, net         (21)     (33)  (34.9)      (86)     (124) (30.6)

    Income (loss) before
     income taxes and
     cumulative effect of
     change in accounting
     principle                181      (17)     nm       521       359   45.3

    Income tax provision        4       61   (93.8)       15        68  (78.2)

    Income (loss) before
     cumulative effect of
     change in accounting
     principle                177      (78)     nm       506       291   74.1

    Cumulative effect of
     change in accounting
     principle                  -        -      nm         -         1     nm

        Net income (loss)    $177     $(78)     nm      $506      $292   74.1

    Income (loss) per
     share before
     cumulative effect of
     change in accounting
     principle:
        Basic               $1.93   $(0.88)            $5.54     $3.41
        Diluted             $1.87   $(0.88)            $5.33     $3.20

    Net income (loss) per
     share:
        Basic               $1.93   $(0.88)            $5.54     $3.42
        Diluted             $1.87   $(0.88)            $5.33     $3.21

    Shares used for
     computation
     (in thousands):
        Basic              91,542   88,212            91,461    85,286
        Diluted            95,492   88,212            95,776    94,474




                            US Airways Group, Inc.
                             Operating Statistics

                    3 Months 3 Months            9 Months  9 Months
                     Ended    Ended               Ended     Ended
                   September September  Percent  September September Percent
                   30, 2007  30, 2006   Change   30, 2007  30, 2006  Change

    Mainline
    Revenue
     passenger
     miles
     (in millions)    16,395    15,950    2.8     47,106     46,058     2.3
    Available seat
     miles (ASM)
     (in millions)    19,669    20,156   (2.4)    57,748     58,020    (0.5)
    Passenger load
     factor (percent)   83.4      79.1    4.3pts    81.6       79.4     2.2pts
    Yield (cents)      13.01     12.86    1.2      13.23      13.13     0.8
    Passenger revenue
     per ASM (cents)   10.85     10.18    6.5      10.79      10.42     3.6

    Passenger
     enplanements
     (in thousands)   14,962    14,425    3.7     44,317     43,189     2.6
    Aircraft
     (end of period)     359       357    0.6        359        357     0.6

    Block Hours      340,146   352,316   (3.5) 1,019,840  1,025,598    (0.6)
    Average stage
     length (miles)      945       956   (1.1)       929        933    (0.5)
    Average passenger
     journey (miles)   1,558     1,576   (1.1)     1,505      1,497     0.5
    Fuel consumption
     (gallons in
     millions)         311.3     318.5   (2.3)     909.8      912.5    (0.3)
    Average fuel price
     (dollars per
     gallon) with
     related taxes      2.22      2.26   (1.6)      2.09       2.13    (1.9)
    Average fuel price
     including related
     taxes and realized
     loss (gain) on
     fuel hedging
     instruments, net
     (dollars)          2.16      2.26   (4.6)      2.11       2.12    (0.5)
    Full-time
     equivalent
     employees
     (end of period)  34,321    33,252    3.2     34,321     33,252     3.2

    Operating cost
     per ASM (cents)   11.11     11.40   (2.6)     11.07      10.96     1.1
    Operating cost
     per ASM excluding
     special items
     (cents)           11.09     10.83    2.4      11.17      10.85     2.9
    Operating cost
     per ASM excluding
     special items,
     fuel and realized
     gain (loss) on
     fuel hedging
     instruments,
     net (cents)        7.68      7.26    5.7       7.85       7.52     4.3

    Express*
    Revenue passenger
     miles (in
     millions)         2,704     2,722   (0.7)     7,827      8,058    (2.9)
    Available seat
     miles (in
     millions)         3,587     3,785   (5.2)    10,592     11,204    (5.5)
    Passenger load
     factor (percent)   75.4      71.9    3.5pts    73.9       71.9     2.0pts
    Passenger revenue
     per ASM (cents)   19.31     18.57    4.0      19.25      18.70     3.0
    Passenger
     enplanements
     (in thousands)    6,662     6,556    1.6     19,474     19,527    (0.3)
    Fuel consumption
     (gallons in
     millions)          86.3      91.6   (5.8)     256.6      267.2    (4.0)
    Average fuel
     price (dollars
     per gallon) with
     related taxes      2.30      2.29    0.5       2.10       2.19    (4.0)
    Operating cost
     per ASM (cents)   18.09     17.27    4.8      18.14      17.22     5.3

    TOTAL - Mainline
     & Express
    Revenue passenger
     miles (in
     millions)        19,099    18,672    2.3     54,933     54,116     1.5
    Available seat
     miles (in
     millions)        23,256    23,941   (2.9)    68,340     69,224    (1.3)
    Passenger load
     factor (percent)   82.1      78.0    4.1pts    80.4       78.2     2.2pts
    Passenger revenue
     per ASM (cents)   12.15     11.51    5.6      12.10      11.76     2.9
    Total revenue
     per ASM (cents)   13.06     12.40    5.3      13.06      12.67     3.1
    Passenger
     enplanements
     (in thousands)   21,624    20,981    3.1     63,791     62,716     1.7
    Operating cost
     per ASM (cents)   12.19     12.33   (1.2)     12.17      11.97     1.6

    * Express includes US Airways Group's wholly owned regional airline
      subsidiaries, Piedmont Airlines and PSA Airlines, US Airways'
      MidAtlantic regional jet division, through May 27, 2006, as well as
      operating and financial results from capacity purchase agreements with
      Mesa Airlines, Chautauqua Airlines, Air Wisconsin Airlines and Republic
      Airlines.


Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gain (Loss) 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 gain or loss 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  3 Months  9 Months  9 Months
                                           Ended     Ended     Ended     Ended
                                       September September September September
                                        30, 2007  30, 2006  30, 2007  30, 2006

                                      (in millions, except share and per share
                                                      amounts)
      Reconciliation of Income (loss)
       before Cumulative Effect of
       Change in Accounting Principle
       Excluding Special Items for
       US Airways Group, Inc.

      Income (loss) before cumulative
       effect of change in accounting
       principle as reported                 $177    $(78)     $506     $291

      Special items:
         Unrealized gain (loss) on fuel
          hedging instruments, net (1)        (13)     88      (128)      44
         Non-cash tax provision from
          utilization of pre-acquisition
          NOL (2)                               4      59        10       59
         Special items, net (3)                17      27        83       18
         Other operating special items (4)      -       -        (9)       -
         Nonoperating special items (5)         -       5        18        9

      Income before cumulative effect of
       change in accounting principle, as
       adjusted for special items            $185    $101      $480     $421

      Shares used for computation (in
       thousands):
         Basic                             91,542  88,212    91,461   85,286
         Diluted                           95,492  95,307    95,776   94,474

      Income per share before cumulative
       effect of change in accounting
       principle, as adjusted for special
       items:
         Basic                              $2.02   $1.15     $5.25    $4.93
         Diluted (6)                        $1.96   $1.09     $5.06    $4.57


                                        3 Months  3 Months  9 Months  9 Months
                                           Ended     Ended     Ended     Ended
                                       September September September September
                                        30, 2007  30, 2006  30, 2007  30, 2006

      Reconciliation of Operating Cost
       per ASM Excluding Special Items,
       Fuel, Realized Gain (Loss) on
       Fuel Hedging Instruments, Net
       - Mainline only

      US Airways Group, Inc.
      (in millions)
      Total operating expenses             $2,834  $2,952    $8,317   $8,288
      Less Express expenses:
               Fuel                          (199)   (210)     (539)    (585)
               Other                         (450)   (443)   (1,382)  (1,345)
      Total mainline operating expenses     2,185   2,299     6,396    6,358

      Special items:
         Unrealized gain (loss) on fuel
          hedging instruments, net (1)         13     (88)      128      (44)
         Special items, net (3)               (17)    (27)      (83)     (18)
         Other operating special items (4)      -       -         9        -
       Mainline operating expenses,
        excluding special items             2,181   2,184     6,450    6,296

       Aircraft fuel                         (692)   (719)   (1,900)  (1,943)
       Realized gain (loss) on fuel
        hedging instruments, net               20       -       (17)      12
       Mainline operating expenses,
        excluding special items, fuel and
        realized gain (loss)
        on fuel hedging instruments, net   $1,509  $1,465    $4,533   $4,365

       (in cents)
       Mainline operating expenses per
        ASM                                 11.11   11.40     11.07    10.96

      Special items per ASM
         Unrealized gain (loss) on fuel
          hedging instruments, net (1)       0.07   (0.44)     0.22    (0.08)
         Special items, net (3)             (0.09)  (0.13)    (0.14)   (0.03)
         Other operating special
          items (4)                           -       -        0.02        -
       Mainline operating expenses per
        ASM, excluding special items        11.09   10.83     11.17    10.85

       Aircraft fuel                        (3.52)  (3.57)    (3.29)   (3.35)
       Realized gain (loss) on fuel
        hedging instruments, net             0.10     -       (0.03)    0.02
       Mainline operating expenses per
        ASM, excluding special items, fuel
        and realized gain (loss)
        on fuel hedging instruments, net     7.68    7.26      7.85     7.52

      Note: Amounts may not recalculate due to rounding.


Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gain (Loss) on Fuel Hedging Instruments, Net – Mainline only

      FOOTNOTES:

    1) The 2007 third quarter and the 2007 nine month periods include $13
       million and $128 million of unrealized gain, respectively. The 2006
       third quarter and the 2006 nine month periods include $88 million and
       $44 million of unrealized loss, resulting from mark-to-market
       accounting for changes in the fair value of the Company's fuel hedging
       instruments.

    2) For the three months and nine months ended September 30, 2007, the
       Company utilized $4 million and $10 million, respectively, of NOL
       acquired from US Airways. The valuation allowance associated with the
       acquired NOL was recognized as a reduction of goodwill rather than a
       reduction in tax expense.  As a result, US Airways had a non-cash
       expense for income taxes of $4 million and $10 million, respectively,
       in the three and nine months ended September 30, 2007.  For the three
       months and nine months ended September 30, 2006, the Company utilized
       $59 million of NOL acquired from US Airways.  Similar to 2007, this
       resulted in a reduction of goodwill rather than a reduction in tax
       expense.  As a result, US Airways had a non-cash expense for income
       taxes of $59 million in the three and nine months ended September 30,
       2006.

    3) The 2007 third quarter and nine month periods include $17 million and
       $83 million, respectively, of merger related transition expenses.  The
       2006 third quarter includes $27 million of merger related transition
       expenses.  The 2006 nine month period includes a $90 million gain
       associated with the return of equipment deposits upon forgiveness of a
       loan, offset by $108 million of merger related transition expenses.

    4) The 2007 nine month period includes $9 million of insurance settlement
       proceeds related to business interruption and property damages incurred
       as a result of Hurricane Katrina.

    5) The 2007 nine month period includes a $18 million write-off of debt
       issuance costs in connection with the refinancing of the $1.25 billion
       GE debt.  The 2006 third quarter includes $5 million payment in
       connection with the inducement to convert $21 million of the 7% Senior
       Convertible Notes to common stock.  The 2006 nine month period includes
       $6 million of prepayment penalties and a $5 million write-off of debt
       issuance costs in connection with the refinancing of the loan
       previously guaranteed by the ATSB and two loans previously provided to
       AWA by GECC, a $5 million payment in connection with the inducement to
       convert $21 million of the 7% Senior Convertible Notes to common stock
       less $7 million of interest income earned by AWA on certain prior year
       federal income tax refunds.

    6) The 2007 EPS computation excludes interest associated with the 7.0%
       senior convertible notes of $1 million and $4 million for the three and
       nine month periods, respectively. The 2006 EPS computation excludes
       interest associated with the 7.0% senior convertible notes of
       $2 million and $7 million for the three and nine months ended September
       30, 2006, respectively and the 7.5% convertible senior notes of
       $4 million for the nine months ended September 30, 2006.



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

                                                  September 30,   December 31,
                                                      2007            2006
    Assets

    Current assets
       Cash, cash equivalents and
        short-term investments                       2,680             2,365
       Restricted cash                                   2                 1
       Accounts receivable, net                        494               388
       Materials and supplies, net                     256               223
       Prepaid expenses and other                      516               377
          Total current assets                       3,948             3,354

    Property and equipment
       Flight equipment                              2,298             2,051
       Ground property and equipment                   672               598
       Less accumulated depreciation and
        amortization                                  (714)             (583)
                                                     2,256             2,066
       Equipment purchase deposits                      78                48
          Total property and equipment               2,334             2,114

    Other assets
       Goodwill                                        619               629
       Other intangibles, net                          535               554
       Restricted cash                                 449               666
       Other assets                                    219               259
          Total other assets                         1,822             2,108

          Total assets                              $8,104            $7,576

    Liabilities and Stockholders' Equity

    Current liabilities
       Current maturities of debt and capital
        leases                                         109                95
       Accounts payable                                391               454
       Air traffic liability                           944               847
       Accrued compensation and vacation               214               262
       Accrued taxes                                   132               181
       Other accrued expenses                          937               873
          Total current liabilities                  2,727             2,712

    Noncurrent liabilities and deferred credits
       Long-term debt and capital leases, net of
        current maturities                           2,980             2,907
       Deferred gains and credits                      177               205
       Employment benefit liabilities and other        754               782
          Total noncurrent liabilities and
           deferred credits                          3,911             3,894

    Stockholders' equity
       Common stock                                      1                 1
       Additional paid-in capital                    1,529             1,501
       Accumulated deficit                             (16)             (522)
       Treasury stock                                  (13)              (13)
       Accumulated other comprehensive income
        (loss)                                         (35)                3
          Total stockholders' equity                 1,466               970

       Total liabilities and stockholders' equity   $8,104            $7,576

Adresse
CONTACT:
Daniel Cravens of US Airways Group, Inc.,
+1-480-693-5729







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