2014

US Airways Group, Inc. Reports Second Quarter Profit Highlights of the US Airways Group, Inc. (the Company) second quarter 2007

results:

- The Company reported a second quarter 2007 net profit of $263 million, or

$2.77 per diluted share.

- Excluding special items, the Company reported a second quarter 2007 net

profit of $261 million, or $2.74 per diluted share.

- The Company accrued approximately $30 million, or 10 percent of its

second quarter 2007 pretax income excluding special items, for its annual

employee profit sharing program. This brings the total amount accrued for

2007 to approximately $34 million.

- The Company had $3.5 billion in total cash and investments, of which $3.0

billion was unrestricted, on June 30, 2007.



    TEMPE, Ariz., July 26 /PRNewswire-FirstCall/ -- US Airways Group, Inc.
 (NYSE:   LCC) today reported its second quarter 2007 results. Net profit for
 the second quarter was $263 million, or $2.77 per diluted share, compared
 to a net profit of $305 million, or $3.25 per diluted share for the same
 period last year. Excluding net special items of $2 million, the Company
 reported a net profit of $261 million, or $2.74 per diluted share. This
 compares to a net profit of $315 million, or $3.35 per diluted share in the
 second quarter of 2006, which excludes a net credit for special items of
 $10 million. 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 our sixth consecutive quarter of profitability. We are
 especially pleased with our performance relative to our industry. Our first
 half 2007 pretax profit margins excluding special charges are the highest
 among the major network airlines that have reported thus far.
     "While our earnings were lower than last year's second quarter, this
 was largely related to increased expenses associated with the operational
 improvement plan we announced last quarter and put into place this summer.
 That plan is working as our second quarter operational reliability has
 improved versus the first quarter and has continued to improve into the
 third quarter.
     "Key to those operational improvements, of course, are our employees
 who have done an outstanding job of taking care of our customers. We're
 delighted to have accrued $34 million for profit sharing in the first half
 of this year and look forward to adding to that amount as the year
 progresses.
     "Although high fuel prices will continue to have a material financial
 impact on our company, we are encouraged by the strengthening revenue
 environment and industry capacity outlook. Looking forward, we maintain our
     projections of profitability for the third quarter and full-year 2007,"
 concluded Parker.
     Revenue and Cost Comparisons
     Mainline passenger revenue per available seat mile (PRASM) was 11.24
 cents, up 1.0 percent over the same period last year. Express PRASM was
 20.72 cents, down 0.1 percent over the second quarter 2006. Total mainline
 and Express PRASM for US Airways Group was 12.70 cents, which was up 0.2
 percent over the second quarter 2006 on a 1.4% decline in total available
 seat miles (ASMs).
     Mainline cost per available seat mile (CASM) at US Airways Group was
 11.34 cents, up 2.6 percent versus the same period last year on a decrease
 in mainline capacity of 0.6 percent versus the second quarter of 2006.
 Excluding fuel, unrealized and realized gains/losses on fuel hedging
 instruments, and merger related transition expenses, mainline CASM was 8.00
 cents, up 5.1 percent from the same period last year.
     Chief Financial Officer Derek Kerr stated, "In the second quarter we
 faced higher maintenance costs associated with the return of leased
 aircraft and engine overhaul timing, and increased expenses driven by
 investments in our operation. As our operational improvements continue to
 gain traction, we expect our costs to normalize."
     In April, US Airways announced an operational improvement plan, which
 included hiring more than 1,000 additional airport personnel, upgrading the
 Company's kiosk equipment and expanding connect times at critical hubs.
 Those actions have had a positive impact on operational reliability. The
 second quarter on-time performance was much improved versus the first
 quarter. This trend has continued into the third quarter with July's
 on-time performance currently running ahead of June.
     Liquidity
     As of June 30, 2007, the Company had $3.5 billion in total cash and
 investments, of which $3.0 billion was unrestricted.
     Second Quarter Special Items
     During its second quarter, the Company recognized $2 million of net
 special items. Expenses for the quarter included $27 million of
 merger-related transition expenses and $5 million of special non-cash state
 tax provision from the utilization of pre-acquisition NOL. These expenses
 were offset by a $25 million non-cash credit for unrealized net gains
 associated with the change in fair value of the Company's outstanding fuel
 hedge contracts and $9 million of insurance settlement proceeds related to
 business interruption and property damage incurred as a result of Hurricane
 Katrina.
     Other Notable Accomplishments
 
     Operations
     -- Hired approximately 1,000 additional airport employees in support of
        the airline's operational improvement plan.
     -- The airline's flight attendant workgroup completed all integration
        training items identified by the Federal Aviation Administration (FAA)
        to certify as one carrier in preparation for a single operating
        certificate later this year.
     -- Began installing the first wave of the 600 replacement kiosks in the
        airline's East Coast operation.
     -- Completed the International Air Transport Association's (IATA)
        International Operational Safety Audit (IOSA), which covered flight
        operations, operations control, maintenance, inflight services, ground
        operations, cargo and security.  The final results show that US Airways
        conformed to every IOSA standard.
     -- Adjusted the airline's schedule to lengthen the operating day by 30
        minutes and added four operational spare aircraft to the US Airways
        system as part of the operational improvement plan.
 
     Labor
     -- Reached final single labor transition agreements covering the flight
        crew training instructors and the flight simulator engineers, each
        represented by the Transport Workers Union (TWU).
     -- Announced plans to recall approximately 225 furloughed flight
        attendants and 130 furloughed pilots through year's end.
 
     Marketing
     -- Agreed to terms on a replacement aircraft order with Airbus S.A.S. for
        60 A320 family narrowbody airplanes and 32 A330 and A350 XWB widebody
        aircraft.  Deliveries are expected to begin in 2009. This transaction
        will position US Airways with one of the youngest and most fuel
        efficient fleets in the U.S. airline industry.  It will also allow us
        to continue growing our international capacity at a faster rate than
        any other major carrier.
     -- Inaugurated new service from Philadelphia to Athens, Brussels and
        Zurich, rounding out the airline's European presence to 19 cities in 12
        countries.
     -- Awarded an industry-coveted Freddie Award in the Best Promotion
        category for Dividend Miles' popular "Everything Counts" program,
        which allows members to accrue miles through a variety of partners.
     -- Submitted an application to the U.S. Department of Transportation to
        fly Charlotte-Philadelphia-Beijing beginning in March 2009, receiving
        support from government officials and business leaders in, among other
        places, North Carolina, Pennsylvania, and Delaware.  Philadelphia is
        the second-largest metropolitan area in the United States without non-
        stop service to China. We anticipate operating the route with Airbus
        A340 aircraft. Support for US Airways' bid can be expressed by signing
        the online petition at www.usairways.com/china.
     Analyst Conference Call/Webcast Details
     US Airways will conduct a live audio webcast of its earnings call today
 at 1 p.m. EDT, which will be available to the public on a listen-only basis
 at 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 Aug. 26, 2007.
     The airline will also update its investor relations guidance on its Web
 site (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
 36,000 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 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 June 30, 2007,
 which is available at www.usairways.com.
                           Financial Tables to Follow
 
 
                             US Airways Group, Inc.
                Condensed Consolidated Statements of Operations
                (in millions except share and per share amounts)
                                  (unaudited)
 
                                              3 Months    3 Months
                                                Ended       Ended
                                               June 30,    June 30,   Percent
                                                 2007        2006      Change
 
     Operating revenues
         Mainline passenger                    $2,194      $2,186        0.4
         Express passenger                        737         780       (5.6)
         Cargo                                     34          37       (7.7)
         Other                                    190         168       12.7
         Total operating revenues               3,155       3,171       (0.5)
 
     Operating expenses
         Aircraft fuel and related taxes          658         669       (1.7)
         Loss (gain) on fuel hedging
          instruments, net:
              Realized                              2         (11)        nm
              Unrealized                          (25)        (18)      36.4
         Salaries and related costs               576         542        6.3
         Express expenses:
              Fuel                                187         203       (8.0)
              Other                               465         457        1.8
         Aircraft rent                            180         180         --
         Aircraft maintenance                     170         153       10.8
         Other rent and landing fees              139         145       (3.9)
         Selling expenses                         125         121        4.4
         Special items, net                        27          35      (22.3)
         Depreciation and amortization             46          45        3.0
         Other                                    316         308        1.8
         Total operating expenses               2,866       2,829        1.3
 
         Operating income                         289         342      (15.3)
 
     Nonoperating income (expenses)
         Interest income                           48          41       16.6
         Interest expense, net                    (69)        (72)      (4.9)
         Other, net                                 3          --         nm
         Nonoperating expenses, net               (18)        (31)     (39.2)
 
     Income before income taxes and
      cumulative effect of change in
      accounting principle                        271         311      (12.9)
 
     Income tax provision                           8           6       19.7
 
     Income before cumulative effect of
      change in accounting principle              263         305      (13.6)
 
     Cumulative effect of change in
      accounting principle                         --          --         nm
 
         Net income                              $263        $305      (13.6)
 
     Income per share before cumulative effect
      of change in accounting principle:
         Basic                                  $2.88       $3.55
         Diluted                                $2.77       $3.25
 
     Net income per share:
         Basic                                  $2.88       $3.55
         Diluted                                $2.77       $3.25
 
     Shares used for computation
      (in thousands):
         Basic                                 91,477      85,886
         Diluted                               95,613      94,673
 
 
                                              6 Months    6 Months
                                                Ended       Ended
                                               June 30,    June 30,   Percent
                                                 2007        2006      Change
 
     Operating revenues
         Mainline passenger                    $4,100       $3,996       2.6
         Express passenger                      1,346        1,392      (3.3)
         Cargo                                     70           74      (4.9)
         Other                                    371          341       8.8
         Total operating revenues               5,887        5,803       1.5
 
     Operating expenses
         Aircraft fuel and related taxes        1,208        1,223      (1.3)
         Loss (gain) on fuel hedging
          instruments, net:
              Realized                             37          (12)       nm
              Unrealized                         (115)         (44)       nm
         Salaries and related costs             1,104        1,045       5.6
         Express expenses:
              Fuel                                340          375      (9.3)
              Other                               932          901       3.5
         Aircraft rent                            360          365      (1.3)
         Aircraft maintenance                     335          291      15.2
         Other rent and landing fees              267          285      (6.5)
         Selling expenses                         231          228       1.8
         Special items, net                        66           (9)       nm
         Depreciation and amortization             90           90        --
         Other                                    627          598       4.6
         Total operating expenses               5,482        5,336       2.7
 
         Operating income                         405          467     (13.2)
 
     Nonoperating income (expenses)
         Interest income                           88           66      32.5
         Interest expense, net                   (140)        (147)     (5.0)
         Other, net                               (13)         (11)     22.4
         Nonoperating expenses, net               (65)         (92)    (29.1)
 
     Income before income taxes and
      cumulative effect of change in
      accounting principle                        340          375      (9.3)
 
     Income tax provision                          11            6      69.1
 
     Income before cumulative effect of
      change in accounting principle              329          369     (10.6)
 
     Cumulative effect of change in
      accounting principle                         --            1        nm
 
         Net income                              $329         $370     (10.9)
 
     Income per share before cumulative effect
      of change in accounting principle:
         Basic                                  $3.60        $4.40
         Diluted                                $3.46        $4.02
 
     Net income per share:
         Basic                                  $3.60        $4.41
         Diluted                                $3.46        $4.03
 
     Shares used for computation
      (in thousands):
         Basic                                 91,420       83,794
         Diluted                               95,918       94,012
 
 
 
                             US Airways Group, Inc.
                              Operating Statistics
 
                                            3 Months    3 Months
                                              Ended       Ended
                                             June 30,    June 30,    Percent
                                               2007        2006       Change
 
     Mainline
     Revenue passenger miles (in millions)    16,294     16,152        0.9
     Available seat miles (ASM) (in millions) 19,523     19,634       (0.6)
     Passenger load factor (percent)            83.5       82.3        1.2 pts
     Yield (cents)                             13.47      13.53       (0.5)
     Passenger revenue per ASM (cents)         11.24      11.13        1.0
 
     Passenger enplanements (in thousands)    15,375     15,173        1.3
     Aircraft (end of period)                    358        359       (0.3)
 
     Block Hours                             344,736    345,703       (0.3)
     Average stage length (miles)                930        941       (1.3)
     Average passenger journey (miles)         1,494      1,491        0.2
     Fuel consumption (gallons in millions)    306.6      308.4       (0.7)
     Average fuel price (dollars per
      gallon) with related taxes                2.15       2.17       (1.1)
     Average fuel price including related
      taxes and realized loss (gain) on fuel
      hedging instruments, net (dollars)        2.15       2.13        0.8
     Full-time equivalent employees (end
      of period)                              35,485     33,535        5.8
 
     Operating cost per ASM (cents)            11.34      11.05        2.6
     Operating cost per ASM excluding
      special items (cents)                    11.37      10.96        3.7
     Operating cost per ASM excluding
      special items, fuel and realized gain
      (loss) on fuel hedging instruments,
      net (cents)                               8.00       7.61        5.1
 
     Express*
     Revenue passenger miles (in millions)     2,740      2,909       (5.8)
     Available seat miles (in millions)        3,558      3,765       (5.5)
     Passenger load factor (percent)            77.0       77.3       (0.3)pts
     Passenger revenue per ASM (cents)         20.72      20.73       (0.1)
     Passenger enplanements (in thousands)     6,857      7,066       (3.0)
     Fuel consumption (gallons in millions)     86.1       89.4       (3.7)
     Average fuel price (dollars per
      gallon) with related taxes                2.17       2.27       (4.5)
     Operating cost per ASM (cents)            18.34      17.54        4.6
 
     TOTAL - Mainline & Express
     Revenue passenger miles (in millions)    19,034     19,061       (0.1)
     Available seat miles (in millions)       23,081     23,399       (1.4)
     Passenger load factor (percent)            82.5       81.5        1.0 pts
     Passenger revenue per ASM (cents)         12.70      12.68        0.2
     Total revenue per ASM (cents)             13.67      13.55        0.9
     Passenger enplanements (in thousands)    22,232     22,239       (0.0)
     Operating cost per ASM (cents)            12.42      12.09        2.7
 
 
                                            6 Months    6 Months
                                              Ended       Ended
                                             June 30,    June 30,    Percent
                                               2007        2006       Change
 
     Mainline
     Revenue passenger miles (in millions)    30,712     30,109        2.0
     Available seat miles (ASM)
      (in millions)                           38,079     37,864        0.6
     Passenger load factor (percent)            80.7       79.5        1.2 pts
     Yield (cents)                             13.35      13.27        0.6
     Passenger revenue per ASM (cents)         10.77      10.55        2.0
 
     Passenger enplanements (in thousands)    29,355     28,765        2.1
     Aircraft (end of period)                    358        359       (0.3)
 
     Block Hours                             679,693    673,280        1.0
     Average stage length (miles)                921        922       (0.1)
     Average passenger journey (miles)         1,478      1,459        1.4
     Fuel consumption (gallons in millions)    598.5      596.0        0.4
     Average fuel price (dollars per
      gallon) with related taxes                2.02       2.05       (1.7)
     Average fuel price including related
      taxes and realized loss (gain) on fuel
      hedging instruments, net (dollars)        2.08       2.03        2.4
     Full-time equivalent employees
      (end of period)                         35,485     33,535        5.8
 
     Operating cost per ASM (cents)            11.06      10.72        3.1
     Operating cost per ASM excluding
      special items (cents)                    11.21      10.86        3.2
     Operating cost per ASM excluding
      special items, fuel and realized gain
      (loss) on fuel hedging instruments,
      net (cents)                               7.94       7.67        3.6
 
     Express*
     Revenue passenger miles (in millions)     5,123      5,336       (4.0)
     Available seat miles (in millions)        7,006      7,419       (5.6)
     Passenger load factor (percent)            73.1       71.9        1.2 pts
     Passenger revenue per ASM (cents)         19.22      18.76        2.4
     Passenger enplanements (in thousands)    12,812     12,971       (1.2)
     Fuel consumption (gallons in millions)    170.3      175.6       (3.0)
     Average fuel price (dollars per
      gallon) with related taxes                2.00       2.14       (6.4)
     Operating cost per ASM (cents)            18.16      17.20        5.6
 
     TOTAL - Mainline & Express
     Revenue passenger miles (in millions)    35,835     35,445        1.1
     Available seat miles (in millions)       45,085     45,283       (0.4)
     Passenger load factor (percent)            79.5       78.3        1.2 pts
     Passenger revenue per ASM (cents)         12.08      11.90        1.5
     Total revenue per ASM (cents)             13.06      12.81        1.9
     Passenger enplanements (in thousands)    42,167     41,736        1.0
     Operating cost per ASM (cents)            12.16      11.78        3.2
 
     * 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  6 Months  6 Months
                                          Ended     Ended     Ended     Ended
                                         June 30,  June 30,  June 30,  June 30,
                                           2007      2006      2007      2006
                                          (in millions, except share and per
                                                    share amounts)
 
      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                            $263      $305      $329      $369
 
      Special items:
         Unrealized gain on fuel hedging
          instruments, net (1)              (25)      (18)     (115)      (44)
         Non-cash tax provision from
          utilization of pre-acquisition
          NOL (2)                             5        --         6        --
         Special items, net (3)              27        35        66        (9)
         Other operating special items (4)   (9)       --        (9)       --
         Nonoperating special items (5)      --        (7)       18         4
 
      Income before cumulative effect of
       change in accounting principle, as
       adjusted for special items          $261      $315      $295      $320
 
      Shares used for computation (in
       thousands):
         Basic                           91,477    85,886    91,420    83,794
         Diluted                         95,613    94,673    95,918    94,012
 
      Income per share before cumulative
       effect of change in accounting
       principle, as adjusted for
       special items:
         Basic                            $2.85     $3.66     $3.23     $3.81
         Diluted (6)                      $2.74     $3.35     $3.11     $3.49
 
 
                                        3 Months  3 Months  6 Months  6 Months
                                          Ended     Ended     Ended     Ended
                                         June 30,  June 30,  June 30,  June 30,
                                           2007      2006      2007      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           $2,866   $2,829   $5,482   $5,336
       Less Express expenses:
                Fuel                        (187)    (203)    (340)    (375)
                Other                       (465)    (457)    (932)    (901)
       Total mainline operating expenses   2,214    2,169    4,210    4,060
 
       Special items:
          Unrealized gain on fuel hedging
           instruments, net (1)               25       18      115       44
          Special items, net (3)             (27)     (35)     (66)       9
          Other operating special items (4)    9       --        9       --
        Mainline operating expenses,
         excluding special items           2,222    2,152    4,269    4,113
 
        Aircraft fuel                       (658)    (669)  (1,208)  (1,223)
        Realized gain (loss) on fuel
         hedging instruments, net             (2)      11      (37)      12
        Mainline operating expenses,
         excluding special items, fuel and
         realized gain (loss) on fuel
         hedging instruments, net         $1,562   $1,494   $3,024   $2,902
 
        (in cents)
        Mainline operating expenses
         per ASM                           11.34    11.05    11.06    10.72
 
       Special items per ASM
           Unrealized gain on fuel hedging
            instruments, net (1)            0.13     0.09     0.30     0.12
           Special items, net (3)          (0.14)   (0.18)   (0.17)    0.02
            Other operating special
             items (4)                      0.05       --     0.03       --
        Mainline operating expenses per
         ASM, excluding special items      11.37    10.96    11.21    10.86
 
        Aircraft fuel                      (3.37)   (3.41)   (3.17)   (3.23)
        Realized gain (loss) on fuel
         hedging instruments, net          (0.01)    0.06    (0.10)    0.03
        Mainline operating expenses per
         ASM, excluding special items, fuel
         and realized gain (loss) on fuel
         hedging instruments, net           8.00     7.61     7.94     7.67
 
       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 second quarter and the 2007 six month periods include
        $25 million and $115 million of unrealized gain, respectively. The 2006
        second quarter and the 2006 six month periods include $18 million and
        $44 million of unrealized gain, resulting from market-to-market
        accounting for changes in the fair value of the Company's fuel hedging
        instruments.
 
     2) For the three months and six months ended June 30, 2007, the Company
        utilized $5 million and $6 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 $5 million and $6 million, respectively, in the three and six
        months ended June 30, 2007.
 
     3) The 2007 second quarter and six month periods include $27 million and
        $66 million, respectively, of merger related transition expenses.  The
        2006 second quarter includes $35 million of merger related transition
        expenses.  The 2006 six month period includes a $90 million gain
        associated with the return of equipment deposits upon forgiveness of a
        loan, offset by $81 million of merger related transition expenses.
 
     4) The 2007 second quarter and six 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 six 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 second quarter includes $7 million of interest
        income earned by AWA on certain prior year federal income tax refunds.
        The 2006 six 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 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 $3 million for the three and
        six month periods, respectively. The 2006 EPS computation excludes
        interest associated with the 7.0% senior convertible notes and the 7.5%
        senior convertible notes of  $3 million and $9 million for the three
        and six month periods, respectively.
 
 
 
                              US Airways Group, Inc.
                       Condensed Consolidated Balance Sheets
                                   (in millions)
                                    (unaudited)
 
                                                    June 30,     December 31,
                                                      2007          2006
     Assets
 
     Current assets
        Cash, cash equivalents and short-
         term investments                             3,021         2,365
        Restricted cash                                   2             1
        Accounts receivable, net                        541           388
        Materials and supplies, net                     242           223
        Prepaid expenses and other                      498           377
           Total current assets                       4,304         3,354
 
     Property and equipment
        Flight equipment                              2,189         2,051
        Ground property and equipment                   646           598
        Less accumulated depreciation and
         amortization                                  (668)         (583)
                                                      2,167         2,066
        Equipment purchase deposits                      65            48
           Total property and equipment               2,232         2,114
 
     Other assets
        Goodwill                                        623           629
        Other intangibles, net                          542           554
        Restricted cash                                 497           666
        Other assets                                    222           259
           Total other assets                         1,884         2,108
 
           Total assets                              $8,420        $7,576
 
     Liabilities and Stockholders' Equity
 
     Current liabilities
        Current maturities of debt and
         capital leases                                 107            95
        Accounts payable                                439           454
        Air traffic liability                         1,267           847
        Accrued compensation and vacation               204           262
        Accrued taxes                                   218           181
        Other accrued expenses                          971           873
           Total current liabilities                  3,206         2,712
 
     Noncurrent liabilities and deferred
      credits
        Long-term debt and capital leases,
         net of current maturities                    2,942         2,907
        Deferred gains and credits                      190           205
        Employment benefit liabilities and other        762           782
           Total noncurrent liabilities
            and deferred credits                      3,894         3,894
 
     Stockholders' equity
        Common stock                                      1             1
        Additional paid-in capital                    1,522         1,501
        Accumulated deficit                            (193)         (522)
        Treasury stock                                  (13)          (13)
        Other comprehensive income                        3             3
           Total stockholders' equity                 1,320           970
 
        Total liabilities and
         stockholders' equity                        $8,420        $7,576
 
 

SOURCE US Airways Group, Inc.
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http://www.americawest.com

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