UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2012~~2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

(Commission File No. 1-8444)

US Airways Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware

54-1194634

(State or other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

111 West Rio Salado Parkway, Tempe, Arizona 85281

(Address of principal executive offices, including zip code)

(480) 693-0800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $0.01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

(Commission File No. 1-8442)

US Airways, Inc.

(Exact name of registrant as specified in its charter)

Delaware

53-0218143

(State or other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

111 West Rio Salado Parkway, Tempe, Arizona 85281

(Address of principal executive offices, including zip code)

(480) 693-0800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.

US Airways Group, Inc. Yes x No ¨ US Airways, Inc. Yes ¨x No x¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


US Airways Group, Inc.	Yes	¨	No	x
US Airways, Inc.	Yes	¨	No	x

Indicate by check mark whether each registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


US Airways Group, Inc.	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
US Airways, Inc.	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


US Airways Group, Inc.	Yes	¨	No	x
US Airways, Inc.	Yes	¨	No	x

The aggregate market value of common stock held by non-affiliates of US Airways Group, Inc. as of of June 30, ~~2012~~2013 was approximately $23.1511 billion. As of June 30, 2013, there was no market for US Airways, Inc. common stock.

~~Indicate~~As byof ~~check mark whether the registrant has filed all documents and reports required to be filed by Section~~February 1221, 132014, orUS ~~15(d)~~Airways ofGroup, ~~the~~Inc. ~~Securities~~had ~~Exchange~~1,000 ~~Act~~shares of ~~1934~~common ~~subsequent~~stock tooutstanding, ~~the~~all ~~distribution~~ of ~~securities~~which ~~under~~were aheld ~~plan confirmed~~ by American aAirlines ~~court~~Group Inc.

As of February 21, 2014, US Airways ~~Group~~, Inc. ~~Yes~~had x1,000 shares Noof ¨common stock outstanding, all of which were held by US Airways Group, Inc. ~~Yes x No ¨~~

AsOMISSION ofOF ~~February 15,~~CERTAIN ~~2013,~~INFORMATION ~~there were 162,897,835 shares of US Airways Group, Inc. common stock outstanding.~~

AsUS ofAirways ~~February 15~~Group, ~~2013,~~Inc. and US Airways, Inc. ~~had~~meet ~~1,000 shares~~the ofconditions ~~common~~set ~~stock~~forth ~~outstanding,~~in ~~all~~General Instruction I(1)(a) and (b) of ~~which~~Form ~~were~~10-K ~~held~~and have therefore omitted the information otherwise called for by USItems ~~Airways~~10-13 ~~Group,~~of ~~Inc~~Form 10-K as allowed under General Instruction I (2)(c).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement related to US Airways Group, Inc.’s 2013 Annual Meeting of Stockholders, which proxy statement will be filed under the Securities Exchange Act of 1934 within 120 days of the end of US Airways Group, Inc.’s fiscal year ended December 31, 2012, are incorporated by reference into Part III of this Annual Report on Form 10-K.

US Airways Group, Inc.

US Airways, Inc.

Form 10-K

Year Ended December 31, ~~2012~~2013

Table of Contents

		Page
PART I	~~PART I~~
Item 1.	Business		5
Item 1A.	Risk Factors		1920
Item 1B.	Unresolved Staff Comments		3435
Item 2.	Properties		3536
Item 3.	Legal Proceedings		3738
Item 4.	Mine Safety Disclosures		3739
PART II	~~PART II~~
Item 5.	Market for ~~US Airways Group~~Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		3840
Item 6.	Selected Financial Data		4042
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		4346
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		7781
Item 8A.	Consolidated Financial Statements and Supplementary Data of US Airways Group, Inc.		7882
Item 8B.	Consolidated Financial Statements and Supplementary Data of US Airways, Inc.		~~111~~122
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		~~141~~160
Item 9A.	Controls and Procedures		~~141~~160
Item 9B.	Other Information		~~146~~165
PART III	~~PART III~~
Item 10.	Directors, Executive Officers and Corporate Governance		~~147~~166
Item 11.	Executive Compensation		~~147~~166
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		~~147~~166
Item 13.	Certain Relationships and Related Transactions, and Director Independence		~~147~~166
Item 14.	Principal Accountant Fees and Services		~~147~~166
PART IV	~~PART IV~~
Item 15.	Exhibits and Financial Statement Schedules		~~148~~168
SIGNATURES			~~149~~

This combined Annual Report on Form 10-K is filed by US Airways Group, Inc. (“US Airways Group”) and its wholly owned subsidiary US Airways, Inc. (“US Airways”). References in this Annual Report on Form 10-K to “we,” “us,” “our” and the “Company” refer to US ~~Airways~~ Airways Group and its consolidated subsidiaries. References in this Annual Report on Form 10-K to “mainline” refer to the operations of US Airways, Inc. and exclude regional operations.

Note Concerning Forward-Looking Statements

Certain of the statements contained in this report 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,” “project,” “could,” “should,” “would,” “continue,” ~~and~~“seek,” ~~similar terms used in connection with statements regarding~~“target,” ~~among others~~“guidance,” ~~our~~ “outlook,” ~~expected~~“if ~~fuel~~current trends ~~costs~~continue,” ~~the revenue and pricing environment~~“optimistic,” ~~and~~“forecast” ~~our expected financial performance~~ and ~~liquidity~~other ~~position~~similar words. ~~These~~Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving American Airlines Group Inc. (“AAG”) and US Airways Group, including future financial and operating results, our plans, objectives, expectations and intentions, and other statements that ~~are~~do not relate solely to historical facts, such as, 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. These forward-looking statements are based ~~upon~~on our ~~the~~ current objectives, beliefs and expectations, ~~of management~~ and they are subject to significant risks and uncertainties that ~~could~~may cause ~~our~~ actual results and financial position and timing of certain events to differ materially from ~~these~~the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 1A, “Risk Factors” and the following: significant operating losses in the future; downturns in economic conditions that adversely affect our business; the impact of continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel; competitive practices in the industry, including the impact of low cost carriers, airline alliances and industry consolidation; the challenges and costs of integrating operations and realizing anticipated synergies and other benefits of the merger transaction with AMR Corporation; our substantial indebtedness and other obligations and the effect they could have on our business and liquidity; an inability to obtain sufficient financing or other capital to operate successfully and in accordance with our current business plan; increased costs of financing, a reduction in the availability of financing and fluctuations in interest rates; the effect our high level of fixed obligations may have on our ability to fund general corporate requirements, obtain additional financing and respond to competitive developments and adverse economic and industry conditions; the impact of any failure to comply with the covenants contained in financing arrangements; provisions in credit card processing and other commercial agreements that may materially reduce our liquidity; the limitations of our historical consolidated financial information, which is not directly comparable to our financial information for prior or future periods; the impact of union disputes, employee strikes and other labor-related disruptions; any inability to maintain labor costs at competitive levels; interruptions or disruptions in service at one or more of our hub airports; any inability to obtain and maintain adequate facilities, infrastructure and slots to operate our flight schedule and expand or change our route network; our reliance on third-party regional operators or third-party service providers that have the ability to affect our revenue and the public’s perception about our services; any inability to effectively manage the costs, rights and functionality of third-party distribution channels on which we rely; extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages; the impact of the heavy taxation to which the airline industry is subject; changes to our business model that may not successfully increase revenues and may cause operational difficulties or decreased demand; the loss of key personnel or inability to attract and retain additional qualified personnel; the impact of conflicts overseas, terrorist attacks and ongoing security concerns; the global scope of our business and any associated economic and political instability or adverse effects of events, circumstances or government actions beyond our control, including the impact of foreign currency exchange rate fluctuations and limitations on the repatriation of cash held in foreign countries; the impact of environmental regulation; our reliance on technology and automated systems and the impact of any failure of these technologies or systems; challenges in integrating our computer, communications and other technology systems; costs of ongoing data security compliance requirements and the impact of any significant data security breach; losses and adverse publicity stemming from any accident involving any of our aircraft or the aircraft of our regional or codeshare operators; delays in scheduled aircraft deliveries, or other loss of anticipated fleet capacity, and failure of new aircraft to perform as expected; our dependence on a limited number of suppliers for aircraft, aircraft engines and parts; the impact of changing economic and other conditions beyond our control, including global events that affect travel behavior such as an outbreak of a contagious disease, and volatility and fluctuations in our results of operations due to seasonality; the effect of a higher than normal number of pilot retirements and a potential shortage of pilots; the impact of possible future increases in insurance costs or reductions in available insurance coverage; the effect of several lawsuits that were filed in connection with the merger transaction with AMR Corporation and remain pending; an inability to use NOL carryforwards; any impairment in the amount of goodwill we recorded as a result of the application of the acquisition method of accounting and an inability to realize the full value of AAG’s and American’s respective intangible or long-lived assets and any material impairment charges that would be recorded as a result; other economic, business, competitive, and/or regulatory factors affecting our business, including those set forth in our filings with the Securities and Exchange Commission (the “SEC”), especially in Part I, Item 1A “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other SEC filings; and other risks and uncertainties listed from time to time in our reports to and filings with the SEC.

• the impact of significant operating losses in the future;

• downturns in economic conditions and their impact on passenger demand, booking practices and related revenues;

• the impact of the price and availability of fuel and significant disruptions in the supply of aircraft fuel;

• competitive practices in the industry, including the impact of industry consolidation;

• increased costs of financing, a reduction in the availability of financing and fluctuations in interest rates;

• our high level of fixed obligations and our ability to fund general corporate requirements, obtain additional financing and respond to competitive developments;

• any failure to comply with the liquidity covenants contained in our financing arrangements;

• provisions in our credit card processing and other commercial agreements that may affect our liquidity;

• the impact of union disputes, employee strikes and other labor-related disruptions;

• our inability to maintain labor costs at competitive levels;

• interruptions or disruptions in service at one or more of our hub airports or our focus city;

• regulatory changes affecting the allocation of slots;

• our reliance on third-party regional operators or third-party service providers;

• our reliance on and costs, rights and functionality of third-party distribution channels, including those provided by global distribution systems, conventional travel agents and online travel agents;

• changes in government regulation;

• the impact of changes to our business model;

• the loss of key personnel or our ability to attract and retain qualified personnel;

• the impact of conflicts overseas or terrorist attacks, and the impact of ongoing security concerns;

• our ability to operate and grow our route network;

•All of the ~~impact~~forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A, “Risk Factors” and elsewhere in this report. There may be other factors of ~~environmental~~which ~~regulation;~~we are 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. We do not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such statements other than as required by law. Forward-looking statements speak only as of the date of this report or as of the dates indicated in the statements.

• our reliance on technology and automated systems and the impact of any failure or disruption of, or delay in, these technologies or systems;

• costs of ongoing data security compliance requirements and the impact of any significant data security breach;

• the impact of any accident involving our aircraft or the aircraft of our regional operators;

• delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity;

• our dependence on a limited number of suppliers for aircraft, aircraft engines and parts;

• our ability to operate profitably out of Philadelphia International Airport;

• the impact of weather conditions and seasonality of airline travel;

• the impact of possible future increases in insurance costs or reductions in available insurance coverage;

• the impact of global events that affect travel behavior, such as an outbreak of a contagious disease;

• the impact of foreign currency exchange rate fluctuations;

• our ability to use NOLs and certain other tax attributes; and

• other risks and uncertainties listed from time to time in our reports to and filings with the Securities and Exchange Commission.

All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part I, Item 1A, “Risk Factors” and elsewhere in this Annual Report on Form 10-K. There may be other factors of which we are 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. We assume no obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these estimates other than as required by law. Any forward-looking statements speak only as of the date of this Annual Report on Form 10-K or as of the dates indicated in the statements.

Additional Information and Where to Find It

This Form 10-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The proposed merger transaction between AMR and US Airways Group will be submitted to the stockholders of US Airways Group for their consideration. AMR expects to file with the SEC a registration statement on Form S-4 that will include a prospectus of AMR and a proxy statement of US Airways Group, and US Airways Group expects to file with the SEC a definitive proxy statement on Schedule 14A. AMR and US Airways Group also plan to file other documents with the SEC regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS OF US AIRWAYS GROUP ARE URGED TO READ THE PROXY STATEMENT, PROSPECTUS AND OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the proxy statement, prospectus and other documents containing important information about AMR and US Airways Group, once such documents are filed with the SEC, through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by US Airways Group, when and if available, can be obtained free of charge on US Airways Group’s website at www.usairways.com or by directing a written request to US Airways Group, Inc., 111 West Rio Salado Parkway, Tempe, Arizona 85281, Attention: Vice President, Legal Affairs. Copies of the documents filed with the SEC by AMR, when and if available, can be obtained free of charge on AMR’s website at www.aa.com or by directing a written request to AMR Corporation, P.O. Box 619616, MD 5675, Dallas/Fort Worth International Airport, Texas 75261-9616, Attention: Investor Relations or by emailing investor.relations@aa.com.

US Airways Group, AMR and certain of their respective directors, executive officers and certain members of management may be deemed to be participants in the solicitation of proxies from the stockholders of US Airways Group in connection with the proposed transaction. Information about the directors and executive officers of US Airways Group is set forth in its proxy statement for its 2012 annual meeting of stockholders, which was filed with the SEC on April 27, 2012. Information about the directors and executive officers of AMR is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the SEC on February 15, 2012. These documents can be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the prospectus and proxy statement and other relevant materials when and if filed with the SEC in connection with the proposed transaction.

Information regarding US Airways Group and US Airways contained in this Form 10-K is provided for the fiscal year ended December 31, 2012. Except as otherwise expressly noted herein, the information contained herein assumes that the Merger has not been consummated and does not describe or discuss the potential impact of the proposed Merger on US Airways Group, US Airways, their respective consolidated subsidiaries or their business, operations, financial performance, or future prospects. Any such information will be contained only in the proxy and/or registration statement that may be filed with the SEC and, if so, may be obtained as described above. Readers are cautioned to read such documents carefully if and when they are filed.

PART I

Item 1. Business

Overview

US Airways Group, a Delaware corporation, is a holding company whose primary business activity is the operation of a major network air carrier through its wholly owned subsidiaries US Airways, Piedmont Airlines, Inc. (“Piedmont”), PSA Airlines, Inc. (“PSA”), Material Services Company, Inc. (“MSC”) and Airways Assurance Limited (“AAL”). MSC and AAL operate in support of our airline subsidiaries in areas such as the procurement of ~~aviation~~jet fuel and insurance. US Airways Group was formed in 1982, and its origins trace back to the formation of All American Aviation in 1939. US Airways, a Delaware corporation, was formed in 1982. On December 9, 2013 (the “Effective ~~upon~~Date”), US Airways Group’s ~~emergence~~became ~~from~~a wholly ~~bankruptcy~~owned onsubsidiary ~~September 27,~~of ~~2005,~~American USAirlines ~~Airways~~ Group ~~merged~~Inc. ~~with~~(formerly ~~America~~known ~~West Holdings~~as AMR Corporation (referred to as “~~America~~AMR” ~~West~~prior ~~Holdings~~to December 9, 2013) and referred to herein as “AAG”) as a result of the merger of AMR Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of AAG, with and into US Airways Group as (the ~~surviving corporation~~“Merger”).

Our ~~principal~~ principal executive offices are located at 111 West Rio Salado Parkway, Tempe, Arizona 85281. Our telephone number is (480) 693-0800, and our internet address is www.usairways.com. Information contained on our website is not and should not be deemed a part of this report or any other report or filing filed with or furnished to the Securities and Exchange Commission (“SEC”).

~~Available~~Recent ~~Information~~Developments

~~A copy~~Merger ofAgreement this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge at www.usairways.com as soon as reasonably practicable after we electronically file such material with, orAMR ~~furnish~~Corporation ~~it to, the SEC.~~

~~Recent~~As ~~Developments~~noted above, on December 9, 2013, US Airways Group became a wholly owned subsidiary of AAG as a result of the Merger. In connection with the Merger, AMR Corporation changed its name from AMR Corporation to American Airlines Group Inc. The Merger was effected pursuant to an Agreement and Plan of Merger, dated as of February 13, 2013, entered into by and among AMR Corporation, US Airways Group and Merger Sub (as amended, the “Merger Agreement”).

~~Merger~~In ~~Agreement~~addition, ~~with~~on December 9, 2013, AMR, ~~Corporation~~its principal subsidiary, American Airlines, Inc. (“American”), and certain of AMR’s other direct and indirect domestic subsidiaries (collectively, the “Debtors”) consummated their reorganization pursuant to the Debtors’ fourth amended joint plan of reorganization (as amended, the “Plan”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

OnAll ~~February 13,~~of ~~2013,~~the ~~AMR~~equity ~~Corporation,~~interests ain ~~Delaware~~AAG ~~corporation~~were ~~(“AMR”),~~issued solely pursuant to the Merger Agreement or the Plan. The aggregate number of shares of AAG Common Stock issuable in the Merger to holders of US Airways Group, ~~and~~equity ~~AMR~~instruments ~~Merger~~(including ~~Sub~~stockholders, ~~Inc.,~~holders aof ~~Delaware~~convertible ~~corporation~~notes, optionees, and ~~wholly~~holders of ~~owned~~restricted ~~subsidiary~~stock ofunits ~~AMR~~ (“~~Merger Sub~~RSUs”),) ~~entered~~represents ~~into~~28% anof ~~Agreement~~the ~~and~~diluted ~~Plan~~equity ownership of ~~Merger~~AAG. (The remaining 72% diluted equity ownership in AAG is distributable, pursuant to the ~~“Merger~~Plan, ~~Agreement”)~~to stakeholders, ~~providing~~labor ~~for~~unions, aand ~~business~~certain ~~combination~~employees of AMR and USthe ~~Airways~~other ~~Group.~~Debtors ~~The~~and ~~Merger~~such ~~Agreement~~72% ~~provides~~of ~~that,~~the ~~upon~~diluted ~~the~~equity ~~terms~~ownership ~~and~~of ~~subject~~AAG (up to ~~the~~approximately ~~conditions~~544 million ~~set~~shares) ~~forth in~~includes ~~the~~all ~~Merger~~shares ~~Agreement,~~of ~~Merger~~AAG ~~Sub~~Common ~~will~~Stock ~~merge~~that ~~with~~are ~~and~~or ~~into~~may USbecome ~~Airways~~issuable ~~Group~~upon conversion of shares of AAG’s Series A Convertible Preferred Stock, par value $0.01 (the “~~Merger~~AAG Preferred Stock”), ~~with~~such USthat ~~Airways~~the ~~Group~~aggregate asnumber ~~the~~of ~~surviving~~shares ~~corporation~~of ~~and~~AAG asCommon aStock ~~wholly~~issuable ~~owned~~under ~~subsidiary~~the Plan will not exceed 72% of ~~AMR.~~the ~~The~~diluted ~~Merger~~equity ~~Agreement~~ownership ~~and~~of AAG as of the ~~transactions~~time of the ~~contemplated~~Merger. ~~thereby~~Pursuant to the Plan, ~~including~~and in accordance with the Merger Agreement, ~~are~~on ~~subject~~December 9, to2013 ~~the~~(i) all ~~approval~~existing shares of AAG’s old common stock, formerly traded under the ~~Bankruptcy~~symbol ~~Court~~“AAMRQ” ~~(as~~on ~~defined~~the ~~below)~~OTCQB marketplace operated by OTC Markets Group, were cancelled and ~~are~~(ii) AAG towas beauthorized ~~effected~~to ~~pursuant~~issue up to aapproximately ~~plan~~544 million shares of ~~reorganization~~common ~~(the~~stock, par value $0.01 per share, of AAG (“~~Plan~~AAG Common Stock”) by operation of ~~AMR~~the ~~and~~Plan ~~certain~~(excluding shares of AAG ~~its~~Common ~~direct~~Stock ~~and~~issuable ~~indirect domestic~~pursuant ~~subsidiaries~~to (the ~~“Debtors”~~Merger Agreement). inPursuant ~~connection~~to ~~with~~the ~~their~~Merger ~~currently~~Agreement ~~pending~~and ~~cases~~consistent ~~under~~with ~~Chapter~~the 11Plan, each share of ~~Title~~common 11stock, ofpar ~~the~~value ~~United~~$0.01 ~~States~~per ~~Code~~share, 11of ~~U.S.C.~~US ~~Sections~~Airways ~~101~~Group et(“US ~~seq.~~Airways ~~(the~~Group ~~“Bankruptcy~~Common ~~Code~~Stock”), inwhich was previously listed on the ~~United~~New ~~States~~York ~~Bankruptcy Court~~Stock ~~for~~Exchange ~~the~~and ~~Southern~~publicly ~~District~~traded, ofwas ~~New~~converted ~~York~~into (the ~~“Bankruptcy~~right ~~Court”).~~to ~~The~~receive ~~Plan~~one isshare ~~subject~~of toAAG ~~confirmation~~Common ~~and~~Stock. ~~consummation~~See inthe ~~accordance~~Annual ~~with~~Report on Form 10-K for the ~~requirements~~year ended December 31, 2013 of AAG for additional information regarding the ~~Bankruptcy~~equity ~~Code~~interests issued and distributed by AAG in connection with the Plan.

~~Subject~~In toconnection with the ~~terms~~completion ~~and conditions~~ of the Merger ~~Agreement~~, ~~which has been approved by~~ the ~~boards~~NYSE ofsuspended ~~directors~~trading ofin the ~~respective parties, if the Merger is completed,~~ US Airways Group ~~stockholders~~Common ~~will~~Stock ~~receive~~prior ~~one~~to ~~share~~the opening of ~~common~~the ~~stock~~market ofon ~~AMR~~December 9, ~~(“New~~2013. ~~American~~The ~~Common~~NYSE ~~Stock”)~~also ~~for~~filed ~~each~~with ~~share~~the ofSEC USa ~~Airways~~Form ~~Group~~25 ~~common~~Notification ~~stock.~~of ~~The~~Removal ~~aggregate~~from ~~number~~Listing ofand/or Registration ~~shares~~under Section 12(b) of ~~New~~the ~~American Common~~Exchange ~~Stock~~Act, ~~issuable~~ to ~~holders~~delist ofthe US Airways Group ~~equity~~Common ~~instruments~~Stock ~~(including~~from ~~stockholders,~~the ~~holders~~NYSE ofand ~~convertible~~terminate ~~notes,~~registration ~~optionees~~of ~~and~~the ~~holders~~US ofAirways ~~restricted~~Group ~~stock~~Common ~~units)~~Stock ~~will~~under ~~represent~~Section 12(b) ~~28%~~ of the ~~diluted~~Exchange ~~capitalization~~Act. ofThe ~~AMR~~AAG ~~after~~Common ~~giving~~Stock ~~effect~~trades toon the ~~Plan.~~NASDAQ ~~The~~Global ~~remaining~~Select ~~72%~~Market ~~equity~~under ~~ownership~~the ofsymbol ~~AMR~~“AAL.” ~~will~~In ~~be distributable~~addition, ~~pursuant~~the toAAG ~~the~~Preferred ~~Plan,~~Stock towas authorized for trading and listed on the ~~Debtors’~~NASDAQ ~~stakeholders,~~Global ~~labor~~Select ~~unions~~Market ~~and~~under ~~certain~~the ~~employees~~symbol “AALCP”.

~~All~~5 of the equity interests in the reorganized AMR will be issued solely pursuant to the Merger Agreement or the Plan. All existing AMR common stock and other equity interests in AMR will be cancelled pursuant to the Plan, although such AMR equity holders are expected to receive a recovery in the form of New American Common Stock.

TheTable Merger is intended to qualify, for federal income tax purposes, as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Contents

5Pursuant to the Merger Agreement and in accordance with the Plan, as of the Effective Date, the board of directors of AAG was reconstituted to be comprised of 12 members: (i) Thomas W. Horton, AMR’s prior chairman, chief executive officer and president, who currently serves as chairman of AAG and will continue to so serve until the earlier of one year after the closing of the Merger or the day immediately prior to the first annual meeting of stockholders of AAG (provided that such meeting will not occur prior to May 1, 2014), (ii) W. Douglas Parker, formerly chief executive officer of US Airways, who serves as chief executive officer of AAG and will serve as chairman of AAG following the end of Mr. Horton’s term, (iii) two independent directors designated by AMR, Alberto Ibargüen and Ray M. Robinson, (iv) three independent directors designated by US Airways Group, Matthew J. Hart, Richard C. Kraemer, and Denise M. O’Leary, and (v) five independent directors, James F. Albaugh, Jeffrey D. Benjamin, John T. Cahill (lead independent director), Michael J. Embler and Richard P. Schifter, who were designated by a search committee consisting of representatives of the Official Committee of Unsecured Creditors of the Debtors and certain representatives of creditors signatory to support agreements with AMR.

~~Table~~Our board of ~~Contents~~directors was reconstituted at that time to consist of Messrs. Horton and Parker and Stephen L. Johnson, Executive Vice President, Corporate Affairs.

~~The Merger Agreement provides that~~Further, ~~upon~~on ~~consummation of~~ the ~~Merger,~~Effective ~~the board of directors of the combined company will initially consist of 12 members~~Date, ~~composed of (i)~~Mr. ~~Thomas~~Parker W.ceased ~~Horton,~~to ~~AMR’s~~be ~~current~~the ~~chairman,~~ chief executive officer ~~and president, who will serve as chairman~~ of ~~the~~US ~~combined~~Airways ~~company until the earlier of (A) one year after the closing of the Merger~~ and ~~(B) the~~Robert ~~day~~D. ~~immediately prior to the first annual meeting of stockholders of the combined company (provided that such meeting will not occur prior to May 1~~Isom, ~~2014), (ii) W~~Jr. ~~Douglas~~ ~~Parker,~~was USelected ~~Airways~~to ~~Group’s current chief executive officer, who will~~ serve as the chief executive officer of ~~the~~US ~~combined~~Airways. ~~company and will serve as chairman of the combined company following the end of~~ Mr. ~~Horton’s~~Parker ~~term,~~was ~~(iii) two independent~~elected directors designated by AMR, (iv) three independent directors designated by US Airways Group, and (v) five independent directors designated by a search committee consisting of representatives of the Official Committee of Unsecured Creditors of the Debtors and certain representatives of creditors signatory to ~~support agreements with AMR, one of whom will~~ serve as ~~lead~~chief ~~independent~~executive ~~director. Subject~~officer toof ~~applicable~~AAG ~~law,~~and ~~prior~~American ~~to the Merger, Messrs. Horton~~ and ~~Parker will~~remains ~~engage in a planning process for integration purposes. The combined company will have its corporate headquarters at AMR’s current corporate headquarters in Ft. Worth, Texas. Immediately after~~ the ~~effective~~chief ~~time~~executive officer of ~~the~~US ~~Merger,~~Airways ~~AMR will change its name to “American Airlines~~ Group ~~Inc~~.”

~~AMR~~On ~~and~~the USEffective ~~Airways~~Date ~~Group have each made customary representations, warranties~~ and ~~covenants~~Pursuant ~~in the Merger Agreement, including, among others, covenants (i)~~ to ~~conduct their businesses in~~ the ~~ordinary~~Plan and ~~usual~~in ~~course~~accordance ~~between~~with the ~~execution of the~~ Merger Agreement ~~and the consummation of the Merger and (ii) not to solicit alternative business combination transactions. In addition~~, ~~the~~US ~~Merger~~Airways ~~Agreement contains “no shop” provisions that restrict each party~~Group’s ~~ability to initiate, solicit or knowingly encourage or~~ ~~facilitate~~certificate ~~competing third-party proposals for any transaction involving a merger~~ of ~~such~~incorporation ~~party or the acquisition of a significant portion of its stock or assets, although each party may consider competing, unsolicited proposals~~ and ~~enter~~bylaws ~~into discussions~~were oramended ~~negotiations regarding such proposals, if its board of directors determines that any such acquisition proposal constitutes, or is reasonably likely to lead to, a superior proposal~~ and ~~that~~restated ~~the~~in ~~failure~~their ~~to take such action is reasonably likely to be inconsistent with its fiduciary duties under applicable law~~entirety.

USThe ~~Airways~~Merger ~~Group~~was ~~has~~intended ~~agreed~~ to ~~certain additional~~qualify, ~~customary~~for ~~covenants~~federal inincome ~~the~~tax ~~Merger Agreement~~purposes, ~~including,~~as ~~among others, subject to certain exceptions, (i) to cause~~ a ~~stockholder~~reorganization ~~meeting~~under ~~to be held to consider adoption of~~ the ~~Merger~~provisions ~~Agreement and (ii) for its board~~ of directors to recommend adoption of the Merger Agreement by US Airways Group’s stockholders. AMR has also agreed to certain additional customary covenants in the Merger Agreement, including, among others, subject to certain exceptions, Section 368(ia) to ~~pursue confirmation~~ of the ~~Plan~~Internal ~~and~~Revenue ~~(ii) for~~Code ~~its board~~ of ~~directors~~1986, toas ~~recommend adoption of the Merger Agreement by the Debtors’ stakeholders~~amended.

~~Consummation~~The ofMerger ~~the~~has ~~Merger~~been isaccounted ~~subject~~for tousing ~~customary~~the ~~conditions,~~acquisition ~~including,~~method ~~among~~of ~~others,~~accounting ~~(i) approval~~with ofAAG treated as the ~~stockholders~~acquirer offor accounting purposes. US Airways Group,’s ~~(ii) expiration~~identifiable orassets ~~termination~~acquired ofand ~~the~~liabilities ~~applicable Hart-Scott-Rodino~~assumed ~~Act~~by ~~waiting~~AAG ~~period~~were ~~and~~recognized ~~the~~at ~~receipt~~their ofestimated ~~certain~~fair ~~other~~values ~~regulatory~~as ~~approvals,~~of ~~(iii) absence~~the ofEffective ~~any~~Date. ~~order~~Goodwill orwas ~~injunction~~measured ~~prohibiting~~as the ~~consummation~~excess of the ~~Merger,~~fair ~~(iv) Bankruptcy~~value ~~Court~~of ~~confirmation~~the ofconsideration transferred in the ~~Plan,~~Merger ~~which~~over ~~shall contain~~the ~~certain~~fair ~~specified~~value ~~provisions~~of ~~agreed~~the toidentifiable ~~pursuant~~net toassets. ~~the~~US ~~Merger~~Airways ~~Agreement,~~Group’s ~~(v) subject~~goodwill tois ~~certain~~not ~~exceptions,~~amortized ~~the~~but ~~accuracy~~is oftested ~~representations~~for ~~and~~impairment ~~warranties~~at ~~with~~least ~~respect~~annually. References to ~~the~~“Successor” ~~business~~and of“2013 ~~AMR~~Successor orPeriod” refer to US Airways Group, ason ~~applicable, (vi) each~~or ofafter ~~AMR~~December 9, 2013 and USthe ~~Airways~~period ~~Group~~from ~~having~~December 9 ~~performed~~to ~~their~~December 31, ~~respective~~2013, ~~obligations~~respectively, ~~pursuant~~after giving effect to the ~~Merger~~application ~~Agreement,~~of ~~and~~acquisition ~~(vii) receipt~~accounting. byReferences ~~each~~to of“Predecessor” ~~AMR~~ and “2013 Predecessor Period” refer to US Airways Group ofprior ato ~~customary~~December 9, ~~tax~~2013 ~~opinion~~and the period from January 1 to December 8, 2013, respectively.

~~The~~See ~~Merger~~Part ~~Agreement~~II, ~~contains~~Item 5 ~~certain~~– ~~termination~~“Market ~~rights~~ for ~~AMR~~Registrant’s ~~and~~Common ~~US Airways Group~~Equity, ~~and~~Related ~~further~~Stockholder ~~provides~~Matters ~~that,~~and ~~upon~~Issuer Purchases ~~termination~~ of ~~the Merger~~Equity ~~Agreement under specified circumstances~~Securities,” ~~(i)~~Item ~~AMR~~7 ~~may~~– be“Management’s ~~required~~Discussion toand ~~pay~~Analysis USof ~~Airways~~Financial ~~Group~~Condition aand ~~termination~~Results ~~fee~~ of ~~$135~~Operations,” ~~million~~Item 8A in– ~~the~~“Consolidated ~~event~~Financial itStatements ~~terminates the agreement to enter into a superior proposal~~ and Supplementary ~~$195~~Data ~~million~~of if US Airways Group ~~terminates~~, ~~the~~Inc.” ~~Merger~~– ~~Agreement~~Note in1 ~~the~~and ~~event~~8B of– a“Consolidated ~~knowing~~Financial Statements and ~~deliberate~~Supplementary ~~breach~~Data of ~~the Merger Agreement by AMR and (ii)~~ US Airways, ~~Group~~Inc.” ~~may~~– beNote ~~required~~1 tofor ~~pay~~further ~~AMR~~information aregarding ~~termination fee of $55 million in~~ the ~~event it terminates the agreement to enter into a superior proposal and $195 million if AMR terminates the~~ Merger ~~Agreement in the event of a knowing and deliberate breach of the Merger Agreement by US Airways Group~~.

~~The~~6 foregoing description of the Merger Agreement is not a complete description of all of the parties’ rights and obligations under the Merger Agreement and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto and is incorporated herein by reference. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of that agreement and as of specific dates; were solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each contracting party to the other for the purposes of allocating contractual risk between them that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of AMR, US Airways Group or any of their respective subsidiaries, affiliates or businesses. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by AMR or US Airways Group. Accordingly, investors should read the representations and warranties in the Merger Agreement not in isolation but only in conjunction with the other information about AMR or US Airways Group and their respective subsidiaries that the respective companies include in reports, statements and other filings they make with the SEC.

6Table of Contents

~~Table~~Airline ofOperations ~~Contents~~

~~Tax~~Prior ~~Benefit~~to ~~Preservation~~the ~~Plan~~Merger, we operated the fifth largest airline in the United States as measured by domestic revenue passenger miles (“RPMs”) and available seat miles (“ASMs”). We have hubs in Charlotte, Philadelphia, Phoenix and Washington, D.C. at Ronald Reagan Washington National Airport (“Washington National”). As of December 31, 2013, we offered scheduled passenger service on more than 3,000 flights daily to 193 communities in the United States, Canada, Mexico, Europe, the Middle East, the Caribbean, and Central and South America. We also have an established East Coast route network, including the US Airways Shuttle service. We had approximately 57 million passengers boarding our mainline flights in 2013. During 2013, our mainline operation provided regularly scheduled service or seasonal service at 133 airports while the US Airways Express network served 150 airports in the United States, Canada, Mexico and the Caribbean, including 76 airports also served by our mainline operation. US Airways Express air carriers had approximately 28 million passengers boarding their planes in 2013. As of December 31, 2013, we operated 343 mainline jets and were supported by our regional airline subsidiaries and third-party regional carriers operating as US Airways Express under capacity purchase agreements, which operated 238 regional jets and 40 turboprops. We also had four regional jets operating under prorate agreements at December 31, 2013.

InOver ~~conjunction~~99% ~~with execution~~ of ~~the~~our ~~Merger~~capacity ~~Agreement,~~touches USour ~~Airways~~hubs ~~Group~~in also adopted a tax benefit preservation plan designed to help preserve the value of the net operating losses and other deferred tax benefits of US Airways Group and the combined enterprise resulting from the Merger with AMR. As part of the planPhoenix, ~~the US Airways Group’s board of directors declared a dividend of one common stock purchase right~~Philadelphia, ~~which~~Charlotte ~~are~~and ~~referred~~Washington toNational ~~as “rights,” for each outstanding share of US Airways Group common stock. The rights will be exercisable if a person~~ or ~~group,~~our ~~without~~hourly ~~the approval of the US Airways Group~~shuttle ~~board~~service orbetween ~~other permitted exception~~Boston, ~~acquires~~New ~~beneficial~~York ~~ownership~~LaGuardia of 4.9% or more of US Airways Group’s outstanding common stock. The rights also will be exercisable if a person or group that already beneficially owns 4.9% or more of the common stock of US Airways Group, without board approval or other permitted exception, acquires additional shares (~~other~~“LaGuardia”) ~~than~~and asWashington ~~a result of a dividend or a stock split)~~National.

Following the Merger, AAG began moving toward operating under the single brand name of “American Airlines” through its mainline operations, American and US Airways. ~~Group~~Until ~~stockholders~~a ~~with~~single ~~ownership~~operating ~~positions~~certificate ~~near~~is orissued ~~above~~by the ~~4.9%~~Federal ~~threshold~~Aviation ~~specified~~Administration (“FAA”) inand the ~~tax~~operational ~~benefit~~integration ~~preservation~~is ~~plan~~complete, ~~are~~American ~~urged~~and US Airways will continue to ~~review~~operate ~~its~~as ~~terms~~separate ~~carefully~~airlines. ~~The~~This ~~foregoing~~process ~~description~~is ~~of the~~expected ~~tax~~to ~~benefit~~take ~~preservation~~18-24 ~~plan~~months. isThrough ~~not~~its aoperating ~~complete~~subsidiaries, ~~description~~including ofthe ~~all~~operating subsidiaries of ~~the~~US ~~parties’~~Airways ~~rights~~Group, ~~and~~AAG ~~obligations~~is ~~under~~the largest airline in the ~~plan~~world as measured by RPMs and isASMs. ~~qualified~~AAG has primary hubs in ~~its~~Charlotte, ~~entirety~~Chicago, byDallas/Fort ~~reference~~Worth, toLos Angeles, Miami, New York City, Philadelphia, Phoenix and Washington, D.C. As of December 31, 2013, the ~~Tax~~combined ~~Benefit~~airline, ~~Preservation~~together ~~Plan~~with ~~which~~its isthird-party ~~filed~~regional ascarriers, ~~Exhibit~~operated 4nearly 6,700 daily flights to 339 destinations in 54 countries.~~10 hereto~~ As of December 31, 2013, American and isUS ~~incorporated~~Airways ~~herein~~operated 965 mainline jets. US Airways continues to be provided with regional feed by ~~reference~~Piedmont, PSA and third-party regional carriers.

~~The~~See Part I, Item 1, Business – “Customer Service” below for discussion of US Airways’ operating performance as reported to the U.S. ~~Airline~~Department ~~Industry~~of Transportation (“DOT”). See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – “US Airways Group’s Results of Operations” and “US Airways’ Results of Operations” for a discussion of US Airways Group’s and US Airways’ operating results and operating performance. See Note 12 to the consolidated financial statements of US Airways Group and US Airways in Part II, Items 8A and 8B, respectively, for information regarding operating segments and operating revenue in principal geographic areas.

~~Even~~7 ~~against a backdrop of uncertain economic conditions and high fuel prices, most of the U.S. industry experienced a profitable 2012 as consumer demand remained strong.~~

InTable itsof most recent data available, Airlines for America, the trade association for U.S. airlines, reported that annual U.S. industry passenger revenues and yields increased 3.8% and 3.2%, respectively, as compared to 2011. Year-over-year growth rates were lower than experienced in 2011 due primarily to more difficult year-over-year comparisons. With respect to international versus domestic revenue performance, Airlines for America reported domestic markets outperformed international markets, which experienced weaker demand due to the economic uncertainty in Europe during 2012. Contents

~~Throughout~~Regional ~~2012,~~Operations jet fuel prices followed the price of Brent crude oil more closely than the price of West Texas Intermediate crude oil. On average, fuel costs were up slightly in 2012 as compared to 2011. The Brent crude oil average daily spot price was $112 per barrel during 2012 as compared to $111 in 2011. However, on a daily basis, prices continued to be volatile. Throughout 2012, daily spot prices fluctuated between a high of $128 per barrel in March to a low of $89 per barrel in June and closed the year at $111 per barrel on December 31, 2012.

~~While~~Certain air carriers, including our wholly owned regional carriers, Piedmont and PSA, and third-party regional carriers, have arrangements with us to provide regional feed under the Utrade name “US Airways Express.S” US Airways Express carriers are an integral component of our operating network. ~~airline~~We ~~industry~~rely isheavily ~~currently~~on ~~benefiting~~feeder traffic from athese ~~favorable~~regional ~~revenue~~carriers, ~~environment~~which carry ~~and~~passengers ~~moderating~~to ~~fuel~~our ~~price~~hubs ~~increases~~from ~~as described~~low-density ~~above,~~markets ~~uncertainty~~that ~~exists~~are ~~regarding~~uneconomical ~~the~~for ~~economic~~us ~~conditions~~to ~~driving~~serve ~~these~~with ~~factors~~large jets. ~~See~~In ~~Part I~~addition, ~~Item 1A,~~regional ~~Risk~~carriers ~~Factors~~offer –complementary ~~“Downturns~~service in ~~economic~~our ~~conditions~~existing ~~adversely~~mainline ~~affect~~markets ~~our~~by ~~business”~~operating ~~and~~flights ~~“Our~~during ~~business~~off-peak isperiods ~~dependent~~between onmainline flights. During 2013, the ~~price~~US Airways Express network served 150 airports in the continental United States, Canada, Mexico and ~~availability~~the ofCaribbean, ~~aircraft~~including ~~fuel~~76 airports also served by our mainline operation. ~~Continued~~During ~~periods~~2013, approximately 28 million passengers boarded US Airways Express air carriers’ planes, approximately 44% of ~~high~~whom ~~volatility~~connected into ~~fuel~~or ~~costs~~from our mainline flights. Of these 28 million passengers, ~~increased~~approximately ~~fuel~~8 million ~~prices~~were enplaned by our wholly owned regional airlines Piedmont and ~~significant~~PSA, ~~disruptions~~approximately in20 million ~~the~~were ~~supply~~enplaned ofby ~~aircraft~~third-party ~~fuel~~regional ~~could~~carriers ~~have~~operating aunder ~~significant~~capacity ~~negative~~purchase ~~impact~~agreements onand ~~our~~less than 1 million were enplaned by carriers operating under prorate agreements, ~~results~~as ~~and~~described ~~liquidity~~below.”

7The US Airways Express arrangements are principally in the form of capacity purchase agreements. The capacity purchase agreements provide that all revenues, including passenger, mail and freight revenues, go to us. In return, we agree to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that certain variable costs, such as airport landing fees and passenger liability insurance, will be reimbursed 100% by us. We control marketing, scheduling, ticketing, pricing and seat inventories. A very small number of regional aircraft are operated for us under prorate agreements, under which the regional carriers receive a prorated share of ticket revenue and pay certain service fees to us. The prorate carrier is responsible for all costs incurred operating the applicable aircraft. All US Airways Express carriers have logos, service marks, aircraft paint schemes and uniforms similar to our mainline operation.

~~Table~~The following table sets forth our US Airways Express capacity purchase agreements and the number and type of ~~Contents~~aircraft operated under those agreements at December 31, 2013.

Airline Operations


Carrier		Number and Type of Aircraft
PSA (1)		49 regional jets
Piedmont (1)		40 turboprops
Air Wisconsin Airlines Corporation		70 regional jets
Republic Airline, Inc. (“Republic”)		58 regional jets
Mesa Airlines, Inc		47 regional jets
SkyWest Airlines, Inc.		14 regional jets

~~We operate the fifth largest airline in the United States as measured by domestic revenue passenger miles~~ (~~“RPMs”~~1) ~~and~~PSA ~~available seat miles (“ASMs”). We have hubs in Charlotte, Philadelphia~~ and ~~Phoenix~~Piedmont ~~and~~are awholly ~~focus~~owned ~~city~~subsidiaries in Washington, D.C. at Ronald Reagan Washington National Airport (“Washington National”). We offer scheduled passenger service on more than 3,000 flights daily to 198 communities in the United States, Canada, Mexico, Europe, the Middle East, the Caribbean, and Central and South America. We also have an established East Coast route network, including the US Airways Shuttle service. We had approximately 54 million passengers boarding our mainline flights in 2012. During 2012, our mainline operation provided regularly scheduled service or seasonal service at 130 airports while the US Airways Express network served 157 airports in the United States, Canada, Mexico and the Caribbean, including 78 airports also served by our mainline operation. US Airways Express air carriers had approximately 28 million passengers boarding their planes in 2012. As of ~~December 31, 2012, we operated 340 mainline jets and were supported by our regional airline subsidiaries and affiliates operating as~~ US Airways ~~Express under capacity purchase agreements, which operated 238 regional jets and 44 turboprops~~Group. ~~Our prorate carriers operated four regional jets at December 31, 2012.~~

In8 December 2011, we closed our slot transaction with Delta Air Lines, Inc. (“Delta”). With all of the schedule changes resulting from our agreement with Delta, over 99 percent of our capacity now touches our hubs in Phoenix, Philadelphia and Charlotte, our focus city at Washington National or our hourly shuttle service between Boston, New York LaGuardia and Washington National.

ReferTable to the “Customer Service” section in Part I for discussion of US Airways’ operating performance as reported to the U.S. Department of Transportation (“DOT”). Contents

~~For~~Other ~~information regarding~~Revenues US Airways Group’s and US Airways’ operating segments and operating revenue in principal geographic areas, see Note 10 to their respective consolidated financial statements included in Part II, Items 8A and 8B of this report.

8Other revenues include checked and excess baggage charges, beverage sales, ticket change and service fees, commissions earned on tickets sold for flights on other airlines and sales of tour packages by the US Airways Vacations division, which are recognized when the services are provided. Other revenues also include processing fees for travel awards issued through the Dividend Miles frequent flyer program and the marketing component earned from selling mileage credits to partners.

~~Table~~The ofU.S. ~~Contents~~Airline Industry

~~Express~~In ~~Operations~~2013, the U.S. airline industry experienced year-over-year growth in passenger revenues driven by strong demand for air travel.

~~Certain~~In ~~air~~its ~~carriers~~most ~~have~~recent ~~code~~data ~~share arrangements with us to operate under the trade name “US Airways Express.” Typically~~available, ~~under~~Airlines afor ~~code share arrangement~~America, ~~one air carrier places its designator code and sells tickets on~~ the ~~flights~~trade ofassociation ~~another~~for ~~air carrier, which is referred to generically as its code share partner~~U. ~~US Airways Express carriers are an integral component of our operating network~~S. ~~We rely heavily on feeder traffic from our US Airways Express partners~~airlines, ~~which~~reported ~~carry passengers to our hubs from low-density markets~~ that ~~are uneconomical for us to serve with large jets. In addition, US Airways Express operators offer complementary service in our existing mainline markets by~~ ~~operating~~annual ~~flights during off-peak periods between mainline flights~~U.S. ~~During~~industry ~~2012,~~passenger ~~the~~revenues ~~US Airways Express network served 157 airports in the continental United States, Canada, Mexico~~ and ~~the~~yields ~~Caribbean,~~increased ~~including 78 airports also served by our mainline operation~~3.8% ~~During~~and ~~2012~~2.0%, ~~approximately 28 million passengers boarded US Airways Express air carriers’ planes~~respectively, ~~approximately~~as ~~44%~~compared ~~of whom connected~~ to or2012. ~~from~~With ~~our~~respect ~~mainline~~to ~~flights.~~international Ofversus ~~these~~domestic ~~28 million passengers~~performance, ~~approximately 8 million~~Airlines ~~were~~for ~~enplaned~~America byreported ~~our~~that ~~wholly~~the ~~owned~~Atlantic ~~regional airlines Piedmont~~ and ~~PSA,~~Latin ~~approximately~~America ~~20 million~~markets outperformed ~~were~~domestic ~~enplaned~~markets byin ~~third~~year-~~party~~over-year ~~carriers~~growth ~~operating~~in ~~under~~passenger ~~capacity~~revenues ~~purchase~~while ~~agreements~~the ~~and~~Pacific ~~less~~market ~~than~~experienced ~~1 million~~year-over-year ~~were~~declines ~~enplaned~~in ~~by carriers~~passenger ~~operating under prorate agreements, as described below~~revenues.

~~The~~Throughout ~~US Airways Express code share arrangements are in the form of either capacity purchase or prorate agreements. The capacity purchase agreements provide that all revenues~~2013, ~~including~~jet ~~passenger,~~fuel ~~mail~~prices ~~and~~continued ~~freight revenues, go~~ to ~~us.~~follow Inthe ~~return,~~price weof ~~agree~~Brent tocrude ~~pay~~oil ~~predetermined~~more ~~fees~~closely tothan ~~these airlines for operating an agreed-upon number of aircraft, without regard to~~ the ~~number~~price of ~~passengers~~West onTexas Intermediate ~~board~~crude oil. InOn ~~addition~~average, ~~these~~fuel ~~agreements~~costs ~~provide~~were ~~that~~down ~~certain~~slightly ~~variable~~in ~~costs,~~2013 ~~such~~ as ~~airport~~compared ~~landing~~to ~~fees~~2012. ~~and~~The ~~passenger~~Brent ~~liability~~crude ~~insurance,~~oil ~~will~~average bedaily ~~reimbursed 100%~~spot byprice ~~us.~~was We$109 ~~control~~per ~~marketing,~~barrel ~~scheduling,~~in ~~ticketing,~~2013 ~~pricing~~which ~~and~~is ~~seat~~slightly ~~inventories.~~lower ~~Under~~than the ~~prorate~~average ~~agreements,~~daily ~~the~~spot ~~prorate~~price ~~carriers~~in ~~receive~~2012 ~~a prorated share~~ of ~~ticket~~$112 ~~revenue and pay certain service fees to us~~per barrel. ~~The~~However, ~~prorate~~on ~~carrier~~a ~~is responsible~~daily ~~for pricing the local~~basis, ~~point~~prices tocontinued ~~point markets~~ to ~~the~~be ~~extent that we do not have competing existing service in that market~~volatile. WeThroughout ~~are~~2013, ~~responsible~~daily ~~for~~spot ~~pricing~~prices ~~all~~fluctuated ~~other~~between ~~prorate~~a ~~carrier~~high ~~tickets.~~of ~~The~~$119 ~~prorate~~per ~~carrier~~barrel isin ~~also~~February ~~responsible~~to ~~for~~a ~~all costs~~low ~~incurred~~of ~~operating~~$97 ~~the~~per ~~aircraft.~~barrel ~~Our~~in ~~prorate~~April ~~carrier, Trans States Airlines, Inc., operated three regional jets~~ and ~~SkyWest~~closed ~~Airlines,~~the ~~Inc.~~year ~~operated~~at ~~one~~$110 ~~regional~~per ~~jet~~barrel ~~under a prorate agreement at~~ on December 31, ~~2012~~2013. ~~All US Airways Express carriers have logos, service marks, aircraft paint schemes and uniforms similar to our mainline operation.~~

~~The~~While ~~following table~~the ~~sets~~U.S. ~~forth~~airline ~~our~~industry USis ~~Airways~~currently ~~Express~~benefiting ~~capacity~~from ~~purchase~~a ~~agreements~~favorable revenue environment and moderating fuel price increases as described above, uncertainty exists regarding the ~~number~~economic conditions driving these factors. See Part I, Item 1A, Risk Factors – “Our business is dependent on the price and ~~type~~availability of aircraft ~~operated~~fuel. ~~under~~Continued ~~those~~periods ~~agreements~~of athigh ~~December 31~~volatility in fuel costs, ~~2012~~increased fuel prices and significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity.”

Carrier		Number and Typeof Aircraft
PSA (1)		49 regional jets
Piedmont (1)		44 turboprops
Air Wisconsin Airlines Corporation		70 regional jets
Republic Airline, Inc. (“Republic”)		58 regional jets
Mesa Airlines, Inc. (2)		38 regional jets
SkyWest Airlines, Inc.		14 regional jets
Chautauqua Airlines, Inc. (2)		9 regional jets

Competition in the Airline Industry

The markets in which we operate are highly competitive. Domestically, any U.S. airline deemed fit by the DOT is generally free to operate scheduled passenger service between any two points within the U.S. and its possessions, with the exception of certain airports that require landing and take-off rights and authorizations and other facilities (1“slots”). ~~PSA~~Price competition occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, target promotions and ~~Piedmont~~frequent ~~are~~flyer ~~wholly~~initiatives. ~~owned~~On ~~subsidiaries~~most of USour domestic non-stop routes, we currently face competing service from at least one, and sometimes more than one, domestic airline, including: Alaska Airlines, Allegiant Air, Delta Air Lines, Inc. (“Delta”), Frontier Airlines, Hawaiian Airlines, JetBlue Airways, ~~Group~~Southwest Airlines, Spirit Airlines, United Airlines and Virgin America. Competition is even greater between cities that require a connection, where the major airlines compete via their respective hubs. In addition, we face competition on some of our connecting routes from airlines operating point-to-point service on such routes. We also compete with all-cargo and charter airlines and, particularly on shorter segments, ground and rail transportation.

~~(2)~~On Inall ~~February~~of ~~2013~~our routes, wepricing ~~executed~~decisions anare ~~amendment~~affected, in large part, by the need to ~~our~~meet competition from other airlines. Airlines typically use discount fares and other promotions to stimulate traffic during normally slack travel periods, when they begin service to new cities or when they have excess capacity, ~~purchase~~to ~~agreement~~generate ~~with~~cash ~~Chautauqua~~flow ~~which~~and ~~removes~~maximize revenue per ASM and to establish, increase or preserve market share. Discount and promotional fares are generally non-refundable and may be subject to various restrictions such as minimum stay requirements, advance ticketing, limited seating and change fees. We have often elected to match discount or promotional fares initiated by other air carriers in certain markets in order to compete in those markets. Most airlines will quickly match price reductions in a particular market. Our ability to compete on the ~~nine~~basis ~~Embraer~~of price ~~145~~is ~~regional~~limited ~~jets~~by ~~they~~our ~~currently~~fixed ~~operate~~costs ~~from~~and depends on our ~~express~~ability ~~fleet~~to bymanage ~~July~~effectively ~~2013~~our operating costs. Some of our competitors have greater financial or other resources and/or lower cost structures than we do. In addition, low fare, low-cost carriers compete in many of the markets in which we ~~executed~~operate anand ~~amendment~~competition tofrom ~~our~~these ~~capacity~~carriers ~~purchase~~is ~~agreement~~increasing. ~~with~~These ~~Mesa~~low ~~Airlines~~cost tocarriers ~~add~~generally ~~nine~~have ~~CRJ~~lower ~~900~~cost ~~aircraft~~structures than US Airways.

~~Marketing~~In addition to price competition, airlines compete for market share by increasing the size of their route system and ~~Alliance~~the ~~Agreements~~number of markets they serve. US Airways Express regional carriers increase the number of markets we serve by flying to lower demand markets and providing connections at our hubs. Many of our competitors also own or have marketing agreements with ~~Other~~regional ~~Airlines~~airlines which provide similar services at their hubs and other locations. We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time performance, type of equipment, cabin configuration, amenities provided to passengers, frequent flyer programs, the automation of travel agent reservation systems, on-board products, markets served and other services. We compete with both major network airlines and low-cost airlines throughout our network.

WeIn ~~maintain~~addition ~~alliance~~to ~~agreements~~our ~~with~~extensive ~~several~~domestic ~~leading~~service, ~~domestic~~we ~~and~~provide international service ~~carriers~~ to ~~give~~Canada, ~~customers~~Mexico, aEurope, ~~greater~~the ~~choice~~Middle ~~of destinations.~~East, ~~Airline~~the ~~alliance~~Caribbean, ~~agreements~~and ~~provide~~Central anand ~~array~~South ~~of benefits that vary by partner~~America. ByRevenues ~~code~~from ~~sharing,~~foreign ~~each~~operations ~~airline~~(flights isserving ~~able~~international ~~to offer additional~~ destinations) towere ~~its~~approximately ~~customers~~19% ~~under~~of ~~its~~our ~~flight~~total ~~designator~~operating ~~code~~revenues ~~without~~for ~~materially~~2013, ~~increasing~~as ~~operating~~measured ~~expenses~~ and ~~capital~~reported ~~expenditures~~to the DOT. ~~Through~~In ~~frequent~~providing ~~flyer~~international ~~arrangements~~air transportation, ~~members~~we ~~are~~compete ~~provided~~ with ~~extended~~foreign ~~networks~~investor-owned ~~for~~airlines, ~~earning~~foreign ~~and~~state-owned ~~redeeming~~airlines, ~~miles~~and ~~on partner carriers~~U.S. USairlines ~~Airways~~that ~~Club~~have ~~members~~been ~~also~~granted ~~have~~authority ~~access~~ to ~~certain~~provide ~~partner carriers’~~scheduled ~~airport~~passenger ~~lounges.~~and cargo Weservice ~~also~~between ~~benefit from~~ the ~~distribution~~U.S. ~~strengths~~and ofvarious ~~each~~overseas ~~of our partner carriers~~locations.

USMarketing ~~Airways is~~and ~~a member of the Star~~ Alliance, ~~the~~Agreements world’s largest airline alliance, which now has 27 member airlines serving 1,329 airports in 194 countries. Membership in the Star Alliance further enhances the value of our domestic and international route network by allowing customers wide access to the global marketplace. Expanded benefits for customers include network expansion, frequent flyer program benefits, airport lounge access, convenient single-ticket pricing with electronic tickets, one-stop check-in and coordinated baggage handling. We also have bilateral marketing/code sharing agreements with Star Alliance members Aegean, Air China, Air New Zealand, ANA, Asiana, AviancaTaca, Brussels Airlines, Croatia Airlines, Lufthansa, Singapore Airlines, South African Airways, Swiss International, TAM, TAP Portugal, Turkish Airlines and United. Other ~~international code sharing partners include EVA Airways, Qatar Airways, Royal Jordanian~~ Airlines and Virgin Atlantic Airways. Each of these code share agreements funnel international traffic onto our domestic flights or support specific European and Caribbean markets in which we operate. Domestically, we code share with Hawaiian Airlines on intra-Hawaii flights.

~~Competition~~We inmaintain ~~the~~alliance agreements with several leading domestic and international carriers to give customers a greater choice of destinations. Airline ~~Industry~~alliance agreements provide an array of benefits that vary by partner. By code sharing, each airline is able to offer additional destinations to its customers under its flight designator code without materially increasing operating expenses and capital expenditures. Through frequent flyer arrangements, members are provided with extended networks for earning and redeeming miles on partner carriers. US Airways Club members also have access to certain partner carriers’ airport lounges. We also benefit from the distribution strengths of each of our partner carriers.

~~The~~US Airways ~~markets~~is incurrently ~~which~~a wemember ~~operate~~of ~~are~~the ~~highly~~Star ~~competitive.~~Alliance®, ~~Price~~which ~~competition~~now ~~occurs~~has on28 amember ~~market-by-market~~airlines ~~basis~~serving ~~through price discounts~~1,328 ~~changes~~airports in ~~pricing~~195 ~~structures~~countries, ~~fare matching, target promotions~~ and ~~frequent~~ ~~flyer~~will ~~initiatives.~~transition ~~Airlines typically use discount fares and other promotions~~ to ~~stimulate traffic during normally slack travel periods~~oneworld, ~~when~~the ~~they~~airline ~~begin~~alliance ~~service~~of which toAAG ~~new~~is ~~cities~~a ~~or when they have excess capacity~~member, toon ~~generate cash flow and maximize revenue per ASM and to establish~~March 31, ~~increase or preserve market share~~2014. ~~Discount~~The ~~and~~oneworld ~~promotional~~alliance ~~fares~~includes ~~are~~AirBerlin, ~~generally~~British ~~non-refundable~~Airways, ~~and~~Cathay ~~may~~Pacific beAirways, ~~subject~~Finnair, toIberia, ~~various~~Japan ~~restrictions~~Airlines, ~~such~~LAN asAirlines, ~~minimum~~Malaysia ~~stay~~Airlines, ~~requirements~~Qantas, ~~advance~~Qatar ~~ticketing~~Airways, ~~limited seating~~Royal Jordanian and ~~change fees~~S7 Airlines. WeTAM ~~have~~Airlines ~~often~~and ~~elected~~SriLankan toAirlines ~~match~~are ~~discount~~scheduled orto ~~promotional~~join ~~fares~~the ~~initiated~~alliance ~~by other air carriers~~ in ~~certain~~the ~~markets~~first inhalf ~~order~~of ~~to compete in those markets~~2014. ~~Most~~The ~~airlines~~oneworld ~~will~~alliance ~~quickly~~links ~~match price reductions in a particular market. Our ability to compete on~~ the ~~basis~~networks of ~~price~~the ismember ~~limited~~carriers byto ~~our~~enhance ~~fixed~~customer ~~costs~~service and ~~depends~~smooth onconnections ~~our ability~~ to ~~manage~~the ~~effectively~~destinations served ~~our~~by ~~operating~~the ~~costs. Some of our competitors have greater financial resources and/or lower cost structures than we do. In addition~~alliance, ~~recent~~including ~~years~~linking ~~have seen~~ the ~~growth~~carriers’ offrequent ~~low-fare,~~flyer ~~low-cost~~programs ~~competitors~~and inaccess ~~many~~to of the ~~markets~~carriers’ inairport ~~which~~lounge ~~we operate~~facilities. ~~These competitors include Southwest~~Together, ~~JetBlue,~~oneworld ~~Allegiant,~~members ~~Frontier,~~and ~~Virgin~~members-elect ~~America~~serve ~~and~~981 ~~Spirit.~~destinations ~~These~~with ~~low~~over ~~cost~~14,000 ~~carriers~~flights ~~generally~~to ~~have~~151 ~~lower cost structures than US Airways~~countries.

InAs ~~addition~~part of the transition to ~~price~~the ~~competition~~oneworld alliance, ~~airlines~~codeshare ~~compete~~and ~~for~~frequent ~~market~~flyer ~~share~~reciprocity between byUS ~~increasing the~~Airways ~~size~~and many members of ~~their~~the ~~route~~Star ~~system~~Alliance ~~and~~will ~~the~~be ~~number~~ending on March 30, 2014. Some of ~~markets~~the ~~they~~largest ~~serve.~~airlines ~~Airlines~~that ~~with~~will ~~international~~be ~~operations~~phased ~~are~~out ~~less~~at ~~exposed~~that totime ~~domestic~~include ~~economic~~United ~~conditions~~Airlines, Lufthansa, Swiss, Brussels Airlines and ~~may~~All Nippon Airways, while others will be ~~able~~phased out in the following months. American is party to ~~offset~~a ~~less~~Joint ~~profitable~~Business ~~domestic~~Agreement ~~fares~~(“JBA”) with ~~more~~British ~~profitable~~Airways, ~~international fares~~Iberia and Finnair. WeAmerican ~~also~~is ~~compete~~in onnegotiations with International Airlines Group (“IAG”), the parent ~~basis~~company of ~~scheduling~~British ~~(frequency~~Airways and ~~flight times)~~Iberia, ~~availability~~concerning ofthe ~~nonstop~~terms by which flights, ~~on-time~~operated ~~performance,~~by ~~type~~US ofAirways ~~equipment,~~will ~~cabin~~be ~~configuration,~~added ~~amenities~~to ~~provided~~American’s existing transatlantic JBA. American has thus far been unable to ~~passengers,~~reach ~~frequent~~agreement ~~flyer~~with ~~programs,~~IAG ~~the~~and ~~automation~~is uncertain if ofit ~~travel~~will ~~agent~~be ~~reservation~~able ~~systems,~~to ~~on-board~~reach ~~products,~~an ~~markets~~agreement. ~~served~~US Airways is expected to enter into codeshare cooperation with selected oneworld member airlines and frequent flyer reciprocity with all other ~~services~~members. WeUS ~~compete~~Airways’ entry into the JBA and cooperation with ~~both~~other ~~major~~carriers ~~full~~is ~~service~~subject ~~airlines~~to compliance with all DOT regulations and ~~low-cost~~applicable orders as well as obtaining required DOT approvals. US Airways is also expected to enter into marketing relationships with selected other airlines ~~throughout~~that are ~~our~~currently ~~network~~party to marketing agreements with American.

~~Additionally,~~10 because we operate a significant number of flights in the eastern United States, our average trip distance, or stage length, is shorter than those of other major airlines. This makes us more susceptible than other major airlines to competition from surface transportation such as automobiles and trains. Surface competition can be more significant during economic downturns when consumers cut back on discretionary spending.

10Table of Contents

~~Table~~Industry ofRegulation ~~Contents~~and Airport Access

~~Industry~~General ~~Regulation and Airport Access~~

~~General~~Our airlines are subject to extensive domestic and international regulatory requirements. The Airline Deregulation Act of 1978, as amended, eliminated most domestic economic regulation of passenger and freight transportation. However, DOT and the FAA still exercise significant regulatory authority over air carriers. DOT maintains jurisdiction over the approval of domestic and international codeshare agreements, international route authorities, and consumer protection and competition matters, such as advertising, denied boarding compensation and baggage liability.

~~Our~~The ~~airline~~FAA ~~subsidiaries~~regulates ~~operate~~flying ~~under~~operations, ~~certificates~~primarily in the areas of ~~public~~flight ~~convenience~~operations, maintenance, and ~~necessity~~other oroperational ~~certificates~~and safety ofareas. ~~commuter~~Pursuant ~~authority~~to these regulations, ~~both~~our airline subsidiaries have FAA-approved maintenance programs for each type of ~~which~~aircraft ~~are~~they ~~issued~~operate. byThe programs provide for the ~~DOT~~ongoing maintenance of such aircraft, ranging from periodic routine inspections to major overhauls. ~~These~~FAA ~~certificates~~requirements ~~may~~cover, beamong ~~altered~~other things, retirement and maintenance of older aircraft, safety measures, collision avoidance systems, airborne windshear avoidance systems, noise abatement, other environmental ~~amended~~concerns, ~~modified~~fuel ortank ~~suspended~~inerting, bycrew ~~the~~scheduling ~~DOT~~and ifaircraft operations. We are also progressing toward the ~~public~~completion ~~convenience~~of ~~and~~numerous ~~necessity~~airworthiness sodirectives, a number of which require us to perform significant maintenance work and to incur additional expenses. Based on the current implementation schedule, orwe ~~may~~expect to be ~~revoked~~in ~~for~~full compliance with the applicable requirements within the required time periods. Our failure to timely comply with these requirements has in the ~~terms~~past and ~~conditions~~could ofin the future ~~certificates~~result in fines and other enforcement actions by the FAA or other regulators. The FAA also operates the air traffic control (“ATC”) system in the United States.

~~Airlines~~Additionally, ~~are also regulated by~~ the ~~Federal Aviation Administration (“~~FAA~~”),~~ ~~primarily~~recently inimplemented ~~the~~rules ~~areas~~on ofpilot flight ~~operations, maintenance~~ and ~~other~~duty ~~operational~~times, and ~~safety~~finalized ~~areas.~~rules ~~Pursuant~~on tominimum ~~these regulations, our airline subsidiaries have FAA-approved maintenance programs~~ requirements for ~~each~~all ~~type~~pilots ofoperating ~~aircraft~~commercial ~~they operate. The programs provide for the ongoing maintenance of such~~ aircraft~~, ranging from periodic routine inspections to major overhauls~~. ~~The~~Both ~~FAA~~rules ~~from~~have ~~time~~increased toour ~~time~~costs ~~issues directives~~ and ~~other~~reduced ~~regulations~~staffing ~~relating to the maintenance and operation of aircraft that require significant expenditures or operational restrictions. Some FAA requirements cover~~flexibility, ~~among~~particularly ~~other~~during ~~things,~~irregular retirement and maintenance of older aircraft, security measures, collision avoidance systems, airborne windshear avoidance systems, noise abatement, other environmental concerns, fuel tank inerting, crew scheduling, aircraft operation and safety and increased inspections and maintenance procedures to be conducted on older aircraftoperations. ~~Our~~We ~~failure~~are toalso ~~timely~~working ~~comply~~ with ~~these requirements has in~~ the ~~past and could in the future result in fines and other enforcement actions by the~~ FAA ~~or other regulators. Additionally, the FAA recently finalized rules~~ on ~~pilot~~integrating ~~flight~~US ~~and~~Airways ~~duty times,~~ and ~~has~~American ~~proposed~~into ~~new~~a ~~rules on minimum requirements for all pilots~~ single operating ~~commercial~~certificate ~~aircraft. Both~~under ~~rules~~the ~~could~~American ~~increase~~operations ~~our costs and reduce staffing flexibility~~specifications.

~~Our~~Airlines ~~airline subsidiaries~~ are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air transportation. ~~Our~~Airlines ~~airline subsidiaries~~ collect the ticket tax, along with certain other U.S. and foreign taxes and user fees on air transportation, and pass along the collected amounts to the appropriate governmental agencies. Although these taxes are not our operating expenses, they represent an additional cost to our customers. ~~There~~In ~~are~~January a2014, ~~number~~Congress ofrestructured ~~efforts~~the inSeptember 11th ~~Congress~~security ~~and~~fee, ~~in other~~which ~~countries~~will toincrease ~~raise~~the ~~different~~fee ~~portions~~on ofsome ~~the~~customers. ~~various~~See ~~taxes~~“Security” ~~imposed~~below onfor ~~airlines~~a ~~and~~discussion ~~their~~of ~~passengers~~passenger fees.

Most major U.S. airports impose a passenger facility charge (“PFC”). The ability of ~~airlines~~airports to ~~contest~~increase ~~increases in~~ this charge (and the ability of airlines to contest such increases) is restricted by federal legislation, DOT regulations and judicial decisions. With certain exceptions, air carriers pass these charges on to passengers. However, our ability to pass through ~~PFCs~~the total amount of the PFC to our customers is subject to various factors, including market conditions and competitive factors. The current cap on the PFC is $4.50 per passenger, but the industry ~~faces~~ ~~regular~~has faced repeated efforts in Congress to raise the cap to a higher level including in the last session of Congress.

DOT consumer rules that took effect onin ~~April 29,~~ 2010 require procedures for customer handling during long onboard delays, asincluding ~~well as~~ additional reporting requirements for airlines, that have increased the cost of airline operations and reduced revenues. The DOT has been aggressively investigating ~~alleged~~ alleged violations of these rules. In addition, the DOT finalized a second set of rules that further regulate airline interactions with passengers through the reservations process, at the airport and on board the aircraft. ~~US Airways is in compliance with these rules, which took effect in August 2011, and others which took effect in January 2012.~~ These rules require airlines to display all fares in an “all in” basis, with the price of the air travel and all taxes and government imposed fees rolled into the displayed fare. Enhanced disclosure of ancillary fees such as baggage fees is also required. Other rules apply to post-ticket purchase price increases and an expansion of tarmac delay regulations to international carriers.

We anticipate a third set of consumer rules to be issued by the DOT in ~~mid-2013.~~2014 Weand ~~continue~~the toDOT ~~see other~~continues its efforts ~~by the DOT~~ to further regulate airlines through increased data reporting requirements, expansion of the Air Carrier Access Act, and greater oversight of the ~~ways~~methods ~~that~~ airlines use to describe and sell air transportation and other products and services. Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to our operation. WeIn ~~cannot~~this ~~assure~~environment, ~~you~~no assurance can be given that compliance with these new rules, anticipated rules or other forms of regulatory oversight from the U.S. Department of Justice (“DOJ”), the FAA or other regulatory bodies will not have a material adverse effect on our business.

OnAmong ~~February 6,~~its ~~2012~~regulatory responsibilities, ~~Congress~~the ~~passed~~DOT ~~the~~also ~~FAA~~enforces ~~Reauthorization~~equal ~~legislation,~~access ~~formally~~to air ~~titled~~transportation asfor ~~“FAA~~disabled ~~Modernization~~passengers. Recently, a number of carriers, including American and ~~Reform~~US ~~Act~~Airways, have entered into consent orders with the DOT over their handling of ~~2012”~~disabled (Hpassengers.R The DOT has been aggressive in prosecuting disability violations and seeks large penalties.~~658).~~ ~~From~~We ~~the~~expect ~~perspective~~to ofsee ~~the~~continued ~~airline~~DOT ~~industry,~~emphasis ~~highlights~~in ~~include:~~this area through both regulation and enforcement.

•DOT Noand ~~increase~~the inAntitrust Division of the DOJ have jurisdiction over airline ~~ticket~~antitrust ormatters. ~~fuel~~The ~~taxes;~~U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services. Labor relations in the air transportation industry are regulated under the Railway Labor Act (“RLA”), which vests in the National Mediation Board (“NMB”) certain functions with respect to disputes between airlines and labor unions relating to union representation and collective bargaining agreements (“CBAs”). In addition, as a result of heightened levels of concern regarding data privacy, we are subject to an increasing number of domestic and foreign laws regarding the privacy and security of passenger and employee data.

•International ~~No increase in PFCs;~~

•International Noair ~~taxation~~transportation is subject to extensive government regulation. Our operating authority in international markets is subject to aviation agreements between the U.S. and the respective countries or governmental authorities (such as the European Union (“EU”)), and in some cases, fares and schedules require the approval of ~~ancillary~~DOT ~~fees~~and/or the relevant foreign governments. Moreover, alliances with international carriers may be subject to the jurisdiction and ~~revenue;~~regulations of various foreign agencies. Bilateral and multilateral agreements among the U.S. and various foreign governments of countries we serve are periodically subject to renegotiation. Changes in U.S. or foreign government aviation policies could result in the alteration or termination of such agreements, diminish the value of route authorities, slots or other assets located abroad, or otherwise adversely affect our international operations. The open skies agreement between the U.S. and Brazil, which was signed in 2010 and takes full effect in 2015, has resulted in increased competition in the U.S./Brazil market. In addition, at some foreign airports, an air carrier needs slots and other facilities before the air carrier can introduce new service or increase existing service. The availability of such slots is not assured and our inability to obtain and retain needed slots and facilities could therefore inhibit our efforts to compete in certain international markets. Further, pursuant to the Merger clearance process in the EU, we are required to make available to other carriers certain slots at London Heathrow. See “Airport Access and Operations” below.

•Security Authorized eight additional daily flights beyond the 1,250 mile perimeter restricting flights to and from Washington National. Four flights were allocated to new entrant and limited incumbents, and four were set aside for incumbent carriers as of the date of enactment (that is, one for each of American, Delta, United and US Airways);

•The ~~Dedicated~~Aviation ~~title~~and ofTransportation Security Act (the ~~legislation~~“Aviation isSecurity ~~intended~~Act”) towas ~~help~~enacted ~~accelerate~~in ~~implementation~~November of2001. Under the Aviation ~~NextGeneration~~Security ~~air~~Act, ~~traffic~~substantially ~~control~~all ~~system~~aspects of civil aviation security screening were federalized, and a new Transportation Security Administration (“TSA”) under the DOT was created. ~~Among~~The TSA was then transferred to the ~~provisions~~Department ~~included~~of Homeland ~~were~~Security ~~mandated~~pursuant ~~performance~~to ~~metrics~~the Homeland Security Act of 2002. The Aviation Security Act, asamong ~~well~~other asmatters, amandates ~~requirement~~improved ~~that~~flight ~~modernization~~deck ~~projects~~security; carriage at 35no ~~major~~charge of federal air marshals; enhanced security screening of passengers, baggage, cargo, mail, employees and vendors; enhanced security training; fingerprint-based background checks of all employees and vendor employees with access to secure areas of airports ~~are~~pursuant to ~~receive~~regulations ~~streamlined~~issued ~~environmental~~in ~~review~~connection with the Aviation Security Act; and the provision of certain passenger data to U.S. Customs and Border Protection.

•Funding ~~Sunset~~for ~~line~~the ~~checks~~TSA is ~~for~~provided ~~pilots~~by ~~over~~a combination of air carrier fees, passenger fees and taxpayer monies. A “passenger security fee,” which is collected by air carriers from their passengers, is currently set at a rate of $2.50 per flight segment but not more than $10 per round trip. However, the Bipartisan Budget Act of 2013 and the Consolidated Appropriations Act of 2014 increased the passenger security fee to $5.60 per one-way trip effective on July 1, 2014. An air carrier fee, or Aviation Security Infrastructure Fee (“ASIF”), has also been imposed with an annual cap equivalent to the amount that an individual air carrier paid in calendar year 2000 for the screening of passengers and property. This fee was repealed by federal legislation and the repeal will go into effect on October 1, 2014.

InImplementation ~~addition,~~of ~~the~~and ~~Transportation~~compliance ~~Security~~with ~~Administration~~the requirements (of the ~~“TSA”)~~Aviation ~~mandates~~Security ~~the~~Act ~~federalization~~have ofresulted ~~certain~~and ~~airport~~will ~~security~~continue ~~procedures~~to ~~and~~result ~~imposes~~in ~~additional~~increased ~~security~~costs ~~requirements~~for onus ~~airports~~ and ~~airlines,~~our ~~most~~passengers ofand ~~which~~have ~~are~~resulted ~~funded~~and bywill alikely ~~per-ticket~~continue ~~tax~~to onresult ~~passengers~~in service disruptions and delays. As a ~~tax~~result onof ~~airlines.~~competitive pressure, ~~The~~we ~~federal~~and ~~government~~other ~~has~~airlines onmay ~~several~~be ~~occasions~~unable ~~proposed~~to arecover ~~significant~~all ~~increase~~of inthese ~~the~~additional ~~per-ticket~~security ~~tax.~~costs Wefrom ~~anticipate~~passengers ~~additional~~through ~~proposals~~increased tofares. ~~raise~~In ~~the ticket~~addition, ~~tax~~we ~~could~~cannot ~~happen~~forecast inwhat ~~future~~new ~~budget~~security and ~~revenue~~safety ~~raising~~requirements ~~proposals~~may be imposed in ~~Congress.~~the Afuture ~~ticket~~or ~~tax~~the costs ~~increase,~~or iffinancial ~~implemented,~~impact ~~could~~of ~~negatively~~complying ~~impact~~with ~~our~~any ~~financial~~such ~~results~~requirements.

~~The~~12 DOT allows local airport authorities to implement procedures designed to abate special noise problems, provided such procedures do not unreasonably interfere with interstate or foreign commerce or the national transportation system. Certain locales, including Boston, Washington D.C., Chicago, San Diego and San Francisco, among others, have established airport restrictions to limit noise, including restrictions on aircraft types to be used and limits on the number of hourly or daily operations or the time of these operations. In some instances, these restrictions have caused curtailments in service or increases in operating costs, and these restrictions could limit the ability of our airline subsidiaries to expand their operations at the affected airports. Authorities at other airports may adopt similar noise regulations.

InternationalTable of Contents

~~The~~Airline ~~availability~~Fares of international routes to domestic air carriers is regulated by agreements between the U.S. and foreign governments. Changes in U.S. or foreign government aviation policy could result in the alteration or termination of these agreements and affect our international operations. We could continue to see significant changes in terms of air service between the United States and Europe as a result of the implementation of the U.S. and the EU Air Transport Agreement, generally referred to as the Open Skies Agreement, which took effect in March 2008. The Open Skies Agreement removed bilateral restrictions on the number of flights between the U.S. and EU. One result of the Open Skies Agreement has been applications before the DOT for antitrust immunity between various domestic and international airlines. The DOT approved two such transatlantic immunities in 2010 involving other carriers. Presently, none of our international operations benefit from antitrust immunity.

~~Security~~Airlines are permitted to establish their own domestic fares without governmental regulation. DOT maintains authority over certain international fares, rates and charges, but applies this authority on a limited basis. In addition, international fares and rates are sometimes subject to the jurisdiction of the governments of the foreign countries which we serve. While air carriers are required to file and adhere to international fare and rate tariffs, substantial commissions, fare overrides and discounts to travel agents, brokers and wholesalers characterize many international markets.

~~The~~Airport Aviation and Transportation Security Act (the “Aviation Security Act”) was enacted in November 2001. Under the Aviation Security Act, substantially all aspects of civil aviation security screening were federalized, and a new TSA under the DOT was created. The TSA was then transferred to the Department of Homeland Security pursuant to the Homeland Security Act of 2002. The Aviation Security Act, among other matters, mandates improved flight deck security; carriage at no charge of federal air marshals; enhanced security screening of passengers, baggage, cargo, mail, employees and vendors; enhanced security training; fingerprint-based background checks of all employees and vendor employees with access to secure areas of airports pursuant to regulations issued in connection with the Aviation Security Act; and the provision of certain passenger data to U.S.Access ~~Customs~~ and ~~Border~~Operations ~~Protection.~~

12Operations at four major domestic airports and certain foreign airports we serve are regulated by governmental entities through allocations of slots or similar regulatory mechanisms which limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time period.

~~Table~~In the U.S., the FAA currently regulates the allocation of ~~Contents~~slots, slot exemptions, operating authorizations, or similar capacity allocation mechanisms at Washington National, LaGuardia and JFK in New York City, and Newark. Our operations at these airports generally require the allocation of slots or analogous regulatory authorities. Similarly, our operations at Frankfurt, London Heathrow, Paris and certain other international airports are regulated by local slot coordinators pursuant to the International Air Transport Association’s Worldwide Scheduling Guidelines (“WSG”) and applicable local law. We currently have sufficient slots or analogous authorizations to operate our existing flights, and we have generally been able to obtain the rights to expand our operations and to change our schedules. There is no assurance, however, that we will be able to do so in the future because, among other reasons, such allocations are often sought after by other airlines, and are subject to changes in governmental policies.

~~Funding~~In ~~for~~connection with the ~~TSA~~settlement isof ~~provided~~antitrust bylitigation abrought ~~combination~~by ofthe ~~air~~DOJ ~~carrier~~and ~~fees~~certain states, ~~passenger~~US ~~fees~~Airways Group and AMR ~~taxpayer~~entered ~~monies~~into settlement agreements that provide for certain asset divestitures. AIn ~~“passenger~~the ~~security~~agreement ~~fee~~with the United States government,” ~~which~~among isother ~~collected~~things, byUS ~~air~~Airways ~~carriers~~and ~~from~~American ~~their~~agreed ~~passengers,~~to isdivest ~~currently~~and ~~set~~not atreacquire afor ~~rate~~10 years certain rights and assets consisting of ~~$2.50~~52 ~~per~~slot ~~flight~~pairs ~~segment~~at ~~but~~Washington ~~not~~National ~~more~~and ~~than~~17 ~~$10~~slot ~~per~~pairs ~~round~~at ~~trip.~~LaGuardia, Anin ~~air~~each ~~carrier~~case ~~fee~~together with associated gates and related ground facilities necessary to operate those slot pairs, orand ~~Aviation~~two ~~Security~~gates at each of Boston Logan International ~~Infrastructure~~Airport, ~~Fee~~Chicago O’Hare International Airport, Dallas Love Field (“~~ASIF~~DAL”), ~~has~~Los ~~also~~Angeles ~~been~~International ~~imposed~~Airport and Miami International Airport. The agreement with anthe ~~annual~~plaintiff ~~cap~~states ~~equivalent~~requires our airlines, subject to ~~the~~certain ~~amount~~conditions and ~~that~~exceptions, anto ~~individual~~maintain ~~air~~certain ~~carrier~~hub ~~paid~~operations in ~~calendar~~a ~~year~~manner ~~2000~~generally consistent with historical operations and to continue to provide scheduled daily service to certain specified communities, both for ~~the~~limited ~~screening~~periods of ~~passengers~~time. In addition, US Airways and ~~property~~American entered into a related settlement with the DOT related to small community service from Washington National. ~~The~~Further, ~~TSA~~as ~~may~~a ~~lift~~consequence ~~this~~of ~~cap~~the atMerger ~~any~~clearance ~~time~~process in the EU, US Airways and American are required to make available one pair of London Heathrow slots for use by another carrier between London and ~~set~~Philadelphia, which the acquiring carrier can deploy on another Heathrow city pair after operating the slots on London-Philadelphia for a ~~new~~period ~~higher~~of ~~fee~~not less than three consecutive years, and, along with our JBA partners, US Airways and American are required to make available for ~~air~~an ~~carriers~~initial period of up to seven years one pair of Heathrow slots for service between London and Miami that may be operated via an intermediate point.

InThe ~~2012,~~DOT weallows ~~incurred~~local ~~expenses~~airport ofauthorities ~~$50~~to ~~million~~implement ~~for~~procedures ~~the~~designed ~~ASIF,~~to ~~including~~abate ~~amounts paid~~special bynoise ~~our wholly owned regional subsidiaries~~problems, ~~PSA~~provided ~~and~~such ~~Piedmont,~~procedures ~~and~~do ~~amounts~~not ~~attributable~~unreasonably tointerfere ~~our~~with ~~other~~interstate ~~regional~~or ~~carriers.~~foreign ~~Implementation~~commerce ofor ~~and~~the ~~compliance~~national ~~with~~transportation ~~the~~system. ~~requirements~~Certain oflocales, ~~the~~including ~~Aviation~~Boston, ~~Security~~Washington ~~Act~~D.C., ~~have~~Chicago, ~~resulted~~San Diego and ~~will~~San ~~continue~~Francisco, toamong ~~result in~~others, ~~increased~~have ~~costs~~established ~~for~~airport usrestrictions ~~and~~to ~~our~~limit ~~passengers~~noise, ~~and~~including ~~have~~restrictions ~~resulted~~on ~~and~~aircraft ~~will~~types ~~likely continue~~ to ~~result~~be inused ~~service disruptions~~ and ~~delays.~~limits Ason athe ~~result~~number of ~~competitive~~hourly ~~pressure,~~or USdaily ~~Airways~~operations ~~and~~or ~~other~~the ~~airlines~~time ~~may~~of bethese ~~unable~~operations. toIn ~~recover~~some ~~all~~instances, of these ~~additional security~~restrictions ~~costs~~have ~~from~~caused curtailments ~~passengers~~in ~~through~~service ~~increased~~or ~~fares.~~increases Inin ~~addition~~operating costs, weand ~~cannot~~these ~~forecast~~restrictions ~~what~~could ~~new~~limit ~~security~~the ~~and~~ability ~~safety~~of ~~requirements~~our ~~may~~airline besubsidiaries ~~imposed~~to inexpand ~~the~~their ~~future~~operations orat the ~~costs~~affected orairports. ~~financial~~Authorities ~~impact~~at ofother ~~complying~~airports ~~with~~may ~~any~~adopt ~~such~~similar ~~requirements~~noise regulations. See “Environmental Matters” below.

Civil Reserve Air Fleet

We are a participant in the Civil Reserve Air Fleet (“CRAF”) program, which is a voluntary program administered by the U.S. Air Force Air Mobility Command. The General Services Administration of the U.S. Government requires that airlines participate in the Civil Reserve Air Fleet program in order to receive U.S. Government business. We are reimbursed at compensatory rates if aircraft are activated under the Civil Reserve Air Fleet program or when participating in Department of Defense business. If a substantial number of our aircraft are activated for operation under the CRAF program at a time of war or other national emergency, our business operations and financial condition may be adversely affected. In January 2014, the U.S. Air Force proposed a radical restructuring of the CRAF program to take effect in October 2015. We do not support the new proposals as they could adversely affect our business and, together with other industry participants, we are working with the U.S. Air Force to address our concerns.

~~Environmental~~13

TheTable airlineof industry is also subject to increasingly stringent federal, state and local laws aimed at protecting the environment. Future regulatory developments and actions could affect operations and increase operating costs for the airline industry, including our airline subsidiaries. Contents

~~Recently,~~Environmental ~~climate~~Matters change issues and greenhouse gas emissions (including carbon) have attracted international and domestic regulatory interest that may result in the imposition of additional regulation on airlines. The U.S. Congress is currently considering legislation on climate change. Although no federal legislation was passed in the last Congress on climate change, several states have adopted or are in the process of adopting greenhouse gas reporting or cap-and-trade programs.

~~Even~~The ~~without~~airline ~~further~~industry ~~federal~~is ~~legislation,~~subject ~~the U.S. Environmental Protection Agency (“EPA”) may act~~ to ~~regulate~~various ~~greenhouse~~laws ~~gas emissions. In December 2009, the EPA issued its final Endangerment~~ and ~~Cause~~government orregulations ~~Contribute~~concerning ~~Findings~~environmental ~~for~~matters ~~Greenhouse Gases, which became effective~~ in ~~January~~the ~~2010~~U.S. ~~This regulatory finding sets the~~and ~~foundation~~other ~~for~~countries. ~~future EPA greenhouse gas regulation under the Clean Air Act~~U.S. ~~The~~federal ~~EPA~~laws ~~also~~that ~~promulgated~~have a ~~new~~particular ~~greenhouse~~impact ~~gas~~on ~~reporting~~our ~~rule,~~operations ~~which~~include ~~became~~the ~~effective~~Airport inNoise ~~December 2009,~~ and ~~which~~Capacity ~~requires~~Act ~~facilities~~of ~~that~~1990 ~~emit more than 25~~(“ANCA”),~~000~~ ~~tons~~the ~~per year~~Clean ofAir ~~carbon~~Act, ~~dioxide-equivalent~~the ~~emissions~~Resource toConservation ~~prepare~~ and ~~file~~Recovery ~~certain emission reports. While some of our facilities may be covered by this rule in the future~~Act, ~~currently none of our facilities meet~~ the ~~threshold~~Clean ~~for~~Water ~~reporting. On February 3~~Act, ~~2009,~~ the ~~EPA~~Safe Drinking ~~adopted~~Water ~~regulations~~Act, ~~implementing~~and ~~changes to~~ the ~~renewable~~Comprehensive ~~fuel~~Environmental ~~standard program~~Response, ~~which~~Compensation ~~require~~and anLiability ~~increasing~~Act ~~amount~~(“CERCLA” ofor ~~renewable fuels in~~ the ~~nation’s~~“Superfund ~~transportation~~Act”). ~~fuel~~The ~~mix~~U.S. ~~The~~Environmental ~~EPA~~Protection isAgency ~~also~~(“EPA”) ~~considering~~and ~~additional~~other ~~regulatory programs.~~federal ~~Depending~~agencies onhave ~~the~~been authorized ~~final~~to ~~outcome~~promulgate ofregulations ~~this~~that ~~rulemaking,~~have ~~some~~an ofimpact on our ~~facilities~~operations. ~~may~~In beaddition ~~subject~~ to ~~additional~~these ~~operating~~federal ~~and~~activities, ~~other~~various ~~permit~~states ~~requirements.~~have Asbeen adelegated ~~result~~certain ofauthorities ~~these~~under ~~various~~the ~~regulatory~~aforementioned ~~initiatives,~~federal ~~our~~statutes. ~~operating~~Many ~~costs~~state ~~may~~and ~~increase~~local ingovernments ~~compliance~~have ~~with~~adopted ~~these~~environmental ~~programs,~~laws ~~although~~and weregulations which are ~~not~~similar ~~situated~~to ~~differently~~or instricter ~~this~~than ~~respect~~federal ~~from our competitors in the industry~~requirements.

The ~~EU’s Emissions Trading Scheme (“ETS”) was scheduled to take full effect in 2012. This scheme has the ability to~~ANCA ~~appreciably~~recognizes ~~raise costs associated with flights to and from EU countries as airlines will have to purchase emissions credits on~~ the ~~open~~rights ~~market to cover some percentage~~ of aairport ~~carrier’s~~operators ~~European operations. US Airways has met all the regulatory milestones associated~~ with ~~the~~noise ~~program~~problems to ~~date.~~implement Inlocal ~~November~~noise ~~2012,~~abatement ~~the~~programs EUso ~~announced~~long ~~plans~~as tothey ~~suspend~~do ~~payments~~not ~~and~~interfere ~~other~~unreasonably ~~aspects~~with ofinterstate ~~the~~or ~~ETS~~foreign ~~through~~commerce ~~October~~or ~~2013 for flights between~~ the EUnational ~~and~~air ~~countries~~transportation ~~outside the EU~~system. USAuthorities ~~Airways does not anticipate~~in ~~any~~several ~~significant~~cities ~~emissions~~have ~~credit~~promulgated ~~expenditures~~aircraft innoise ~~2013.~~reduction ~~In addition~~programs, ~~President~~including ~~Obama recently signed legislation that will allow~~ the ~~Secretary~~imposition of ~~Transportation~~nighttime ~~to prohibit U~~curfews.S. ~~airlines~~The ~~from~~ANCA ~~participating~~generally inrequires ~~the~~FAA ~~ETS.~~approval ~~Whether~~of USlocal ~~Airways~~noise ~~will~~restrictions ~~ever~~on ~~be required~~aircraft. toWhile ~~purchase~~we ~~and~~have ~~redeem~~had ~~emissions~~sufficient ~~credits~~scheduling ~~under~~flexibility to ~~the~~accommodate EUlocal ~~scheme~~noise isrestrictions ~~still~~imposed ~~unknown.~~to ~~However~~date, itour isoperations ~~increasingly~~could ~~likely that in the future we will~~ be ~~subject~~adversely toaffected ~~some~~if ~~form~~locally-imposed ~~of regulation governing aircraft emissions. How such~~ regulations ~~are implemented~~become ~~or what the impact on us will be is unknown at this time. For~~ more ~~discussion~~restrictive ofor ~~environmental regulation, see Part I, Item 1A, Risk Factors – “We are subject to many forms of environmental regulation and may incur substantial costs as a result~~widespread.”

13Many aspects of our operations are subject to increasingly stringent environmental regulations. Concerns about climate change and greenhouse gas emissions, in particular, may result in the imposition of additional international and domestic legislation or regulation. For example, the EU has established the Emissions Trading Scheme (“ETS”) to regulate carbon dioxide emissions in the EU. The EU adopted a directive under which each EU member state is required to extend the ETS to aviation operations. This directive would have required us, beginning in 2012, in order to operate flights to and from airports in the European Economic Area (“EEA”), including flights between the U.S. and EU member states, to annually submit emission allowances equal to our total carbon dioxide emissions from those flights. While a certain portion of those allowances are granted to us at no cost, we may potentially need to also purchase allowances in order to cover our emissions total in a given year. However, in an effort to allow ICAO time to propose an alternate scheme to manage global aviation emissions, in April 2013 the EU suspended for one year the ETS’ application to flights entering and departing the EEA, limiting its application, for flights flown in 2012, to intra-EEA flights only. In October 2013, the ICAO Assembly adopted a resolution calling for the development through ICAO of a global, market-based scheme for aviation emissions, to be implemented in 2020. Subsequently, the EU has proposed amending the EU ETS so that the monitoring, reporting and submission of allowances for emissions from flights flown in 2013 would continue to be limited to only intra-EEA flights. For flights flown from 2014 to 2020, the scope of coverage under the amendment would include intra-EEA flights and the portion of aviation emissions of flights to and from EU member states that take place in European regional airspace. The EU anticipates approval of this amendment in April 2014. The U.S. enacted legislation in November 2012 which encourages the DOT to seek an international solution through ICAO and that will allow the U.S. Secretary of Transportation to prohibit U.S. airlines from participating in the ETS. While these measures create some uncertainty as to the extent to which we will be required to participate in the ETS going forward, it is nevertheless increasingly likely that in the future we will be required to participate in some form of international arrangement governing aircraft emissions.

~~Table~~In addition, the U.S. Congress has considered legislation on climate change. Although Congress has not passed comprehensive climate change legislation, several states have adopted mechanisms to regulate greenhouse gas emissions. Even without further federal legislation, the EPA may act to regulate greenhouse gas emissions. In 2009, the EPA issued its final Endangerment and Cause or Contribute Findings for Greenhouse Gases, which became effective in January 2010. This regulatory finding sets the foundation for potential future EPA greenhouse gas regulation under the Clean Air Act. Depending on the scope of ~~Contents~~such regulation, certain of our facilities and operations may be subject to additional operating and other permit requirements, potentially resulting in increased operating costs.

~~Employees~~The environmental laws to which we are subject include those related to responsibility for potential soil and ~~Labor~~groundwater contamination. ~~Relations~~We are conducting investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance bases. We anticipate that the ongoing costs of such activities will not have a material impact on our operations. In addition, we have been named as a potentially responsible party (“PRP”) at certain Superfund sites. Our alleged volumetric contributions at such sites are relatively small in comparison to total contributions of all PRPs; we anticipate that any future payments of costs at such sites will not have a material impact on our operations.

~~Our~~14 business is labor intensive. In 2012, wages, salaries and benefits were one of our largest expenses and represented approximately 22% of our operating expenses. As of December 31, 2012, US Airways employed approximately 31,200 active full-time equivalent employees, including approximately 4,000 pilots, 7,000 flight attendants, 3,200 maintenance personnel, 5,400 fleet service personnel, 6,100 passenger service personnel and 5,500 personnel in administrative and various other job categories. In addition, our express subsidiaries, Piedmont and PSA, employed approximately 5,300 active full-time equivalent employees, including approximately 800 pilots, 400 flight attendants, 400 maintenance personnel, 2,500 passenger service personnel and 1,200 personnel in administrative and various other job categories.

ATable large majority of the employees of the major airlines in the United States are represented by labor unions. As of December 31, 2012, approximately 83% of our active employees were represented by various labor unions. Relations between air carriers and labor unions in the United States are governed by the Railway Labor Act (“RLA”). Under the RLA, collective bargaining agreements generally contain “amendable dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the National Mediation Board (“NMB”). Contents

IfFuture noRegulatory ~~agreement~~Developments is reached during direct negotiations between the parties, either party may request the NMB to appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation processes, and it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation, the NMB in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit to arbitration, and if arbitration is rejected by either party, a 30-day “cooling off” period commences. During or after that period, a Presidential Emergency Board (“PEB”) may be established, which examines the parties’ positions and recommends a solution. The PEB process lasts for 30 days and is followed by another 30-day “cooling off” period. At the end of a “cooling off” period, unless an agreement is reached or action is taken by Congress, the labor organization may exercise “self-help,” such as a strike, and the airline may resort to its own “self-help,” including the imposition of any or all of its proposed amendments and the hiring of new employees to replace any striking workers.

14Future regulatory developments and actions could affect operations and increase operating costs for the airline industry, including our airline subsidiaries. See Part I, Item 1A, Risk Factors – “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages” and “We are subject to many forms of environmental regulation and may incur substantial costs as a result” for additional information.

~~Table~~Employees ofand ~~Contents~~Labor Relations

Our business is labor intensive. For the combined 2013 Predecessor and Successor Periods, wages, salaries and benefits were one of our largest expenses and represented approximately 22% of our operating expenses. As of December 31, 2013, US Airways employed approximately 32,100 active full-time equivalent employees, ~~are~~including ~~covered~~approximately by4,100 ~~labor~~pilots, ~~agreements~~7,700 asflight attendants, ~~set~~3,100 ~~forth~~maintenance ~~below~~personnel, 5,500 fleet service personnel, 6,200 passenger service personnel and 5,500 personnel in administrative and various other job categories. ~~With~~In ~~the~~addition, ~~exception~~our regional subsidiaries, Piedmont and PSA, employed ofapproximately ~~the~~5,300 ~~tentative~~active ~~agreements~~full-time ~~that~~equivalent ~~have~~employees, ~~been~~including ~~reached~~approximately ~~since~~800 ~~the~~pilots, ~~beginning~~500 offlight ~~2013~~attendants, ~~all~~400 ~~labor~~maintenance ~~contracts~~personnel, ~~that~~2,500 ~~are~~passenger ~~amendable~~service aspersonnel ofand ~~December 31~~1,100 ~~2012~~personnel ~~are~~in ~~currently~~administrative ~~being~~and ~~negotiated~~various other job categories.

Union	Class or Craft	Employees (1)		ContractAmendable Date
Mainline:
US Airline Pilots Association (“USAPA”)	Premerger US Airways Pilots		2,600		12/31/2009	(2)
USAPA	Premerger America West Pilots		1,400		12/30/2006	(2)
Transport Workers Union (“TWU”)	Flight Crew Training Instructors		100		12/31/2011
TWU	Flight Simulator Engineers		60		12/31/2011
Association of Flight Attendants-CWA (“AFA”)	Premerger US Airways Flight Attendants		4,800		12/31/2011	(3)
AFA	Premerger America West Flight Attendants		2,200		05/04/2004	(3)
International Association of Machinists & Aerospace Workers (“IAM”)	Mechanics, Stock Clerks and Related		3,200		12/31/2011
IAM	Maintenance Training Instructors		30		12/31/2011
IAM	Fleet Service		5,400		12/31/2011
Airline Customer Service Employee Association — IBT and CWA (the “Association”)	Passenger Service		6,100		12/31/2011
TWU	Dispatch		200		06/30/2015
Piedmont:
Air Line Pilots Association (“ALPA”)	Pilots		350		05/19/2009	(4)
AFA	Flight Attendants		150		08/01/2009
International Brotherhood of Teamsters (“IBT”)	Mechanics		300		08/23/2012
IBT	Stock Clerks		30		04/18/2014
Communications Workers of America (“CWA”)	Fleet and Passenger Service		2,500		02/05/2017	(5)
IBT	Dispatch		20		06/16/2014
PSA:
ALPA	Pilots		450		06/30/2009	(6)
AFA	Flight Attendants		250		04/30/2017	(7)
IAM	Mechanics		100		04/24/2016
TWU	Dispatch		20		09/04/2014

As of December 31, 2013, approximately 84% of our active employees were represented by various labor unions and covered by CBAs.

~~(1)~~US ~~Approximate~~Airways ~~number of active full-time equivalent~~ employees are covered by ~~the~~labor ~~contract~~agreements as ofset ~~December~~forth ~~31, 2012~~below.

(2) Pilots continue to work under the terms of their separate US Airways and America West collective bargaining agreements, as modified by the transition agreements reached in connection with the merger in 2005. On April 18, 2008, the NMB certified USAPA as the collective bargaining representative for the pilots of the combined company, including pilot groups from both pre-merger America West and US Airways. On February 8, 2013, the pilots voted to ratify a memorandum of understanding (“MOU”) that will become effective in the event a merger with AMR is consummated. If the merger is completed, the MOU provides a six-year agreement for the pilots of the combined post-merger carrier.


Union	Class or Craft	Employees (1)		Contract Amendable Date
Mainline:
US Airline Pilots Association (“USAPA”)	Premerger US Airways Pilots		2,800			(2)
USAPA	Premerger America West Pilots		1,300			(2)
TWU	Flight Crew Training Instructors		100			(2)
TWU	Flight Simulator Engineers		50			(2)
AFA	Flight Attendants		7,700			(2)
IAM	Mechanics, Stock Clerks and Related		3,100			(2)
IAM	Maintenance Training Instructors		30			(2)
IAM	Fleet Service		5,500			(2)
CWA-IBT	Passenger Service		6,200			(2)
TWU	Dispatch		200			(2)

Piedmont:
Air Line Pilots Association (“ALPA”)	Pilots		300		03/31/2018
AFA	Flight Attendants		150		08/01/2009
International Brotherhood of Teamsters (“IBT”)	Mechanics		250		08/23/2012
IBT	Stock Clerks		30		04/18/2014
Communications Workers of America (“CWA”)	Fleet and Passenger Service		2,500		02/05/2017
IBT	Dispatch		20		06/16/2014

PSA:
ALPA	Pilots		500		04/01/2018
AFA	Flight Attendants		300		04/30/2017
IAM	Mechanics		150		04/24/2016
TWU	Dispatch		20		09/04/2014

(31) InApproximate ~~January~~number ~~2013,~~of weactive ~~reached~~full-time aequivalent ~~tentative~~employees ~~agreement~~covered ~~with~~by the ~~AFA~~contract ~~for~~as aof ~~single~~December ~~labor~~31, ~~agreement applicable to both premerger US Airways and America West flight attendants~~2013. ~~This tentative agreement is subject to ratification by the AFA membership.~~

(42) InSee ~~February~~discussion ~~2013,~~below ~~Piedmont~~regarding ~~Airlines~~the ~~reached~~process aof ~~tentative~~combining ~~agreement~~mainline ~~with~~employee ~~its~~groups ~~pilots, represented by ALPA~~post-Merger. ~~This tentative agreement is subject to ratification by the ALPA membership.~~

~~(5)~~Relations with such labor organizations are governed by the RLA. Under the RLA, the NMB is responsible for determining which union, if any, is designated to represent employees. In ~~June~~an ~~2012~~airline merger, ~~fleet~~when ~~and~~different ~~passenger~~unions ~~service~~represent the employees at ~~Piedmont~~the ~~Airlines~~merging carrier, ~~represented~~a union may file an application with the NMB to represent the combined group of post-merger employees. The application is reviewed by the ~~CWA,~~NMB ~~voted~~which considers whether the operations of the merging carriers have been sufficiently integrated to ~~ratify~~constitute a ~~new~~single ~~four~~transportation ~~and~~system. After the integration process is found to have created a ~~half~~single ~~year~~transportation system, the NMB then conducts an investigation to determine which union, if any, is to be the representative of the post-merger employees. That union then negotiates a joint collective bargaining agreement (“JCBA”) covering the combined group of post-merger employees.

~~(6)~~While Inthe ~~February~~passenger ~~2013,~~service ~~PSA~~employees ~~Airlines~~at mainline ~~reached~~American aare ~~tentative~~not ~~agreement~~currently ~~with~~represented ~~its~~by ~~pilots~~any labor organization, the passenger service employees of mainline US Airways are represented by ~~ALPA~~the Airline Employees Customer Service Association, CWA-IBT (“CWA-IBT”). ~~This~~When ~~tentative~~and ~~agreement~~if the CWA-IBT files a single transportation system application with the NMB, the union is ~~subject~~expected to ~~ratification~~attempt to organize the passenger service employees of both mainline airlines. In the meantime, the US Airways passenger service employees will continue to be represented by the ~~ALPA~~CWA-IBT, ~~membership~~and the American passenger service employees will remain unrepresented for labor relations purposes.

~~(7)~~Most Inof ~~March~~the ~~2012,~~other ~~flight~~mainline ~~attendants~~American atground ~~PSA~~employees ~~Airlines,~~are represented by the ~~AFA~~Transport ~~Council~~Workers 75Union (“TWU”) and are covered by existing CBAs. Although those agreements will not become amendable until 2018, ~~voted~~the TWU is required under the agreements to ~~ratify~~file a ~~new~~single ~~five~~transportation system application in order to represent the combined groups of mainline US Airways and mainline American employees. For the fleet service employees, the mechanic and related employees and the stores employees, the TWU may share post-~~year~~merger ~~collective~~representation ~~bargaining~~rights ~~agreement~~with the International Association of Machinists and Aerospace Workers (“IAM”). After the NMB has determined that a single transportation system exists and has certified a post-merger representative of the combined employee groups, the process for negotiating new JCBA covering the combined employee groups will commence. That process can take many months or even several years to complete.

~~There~~Under ~~are~~an ~~few~~agreement ~~remaining~~reached ~~unrepresented~~with ~~employee~~the ~~groups~~American ~~that~~mainline ~~could~~and ~~engage~~the inUS ~~organization~~Airways mainline ~~efforts.~~pilots Weand ~~cannot~~a ~~predict~~tentative agreement with the ~~outcome~~American ofand ~~any~~US ~~future~~Airways ~~efforts~~mainline flight attendants, a different approach will be used by us to ~~organize~~reach ~~those~~JCBAs. ~~remaining~~The ~~employees~~two orpilot ~~the~~groups ~~terms~~have ofagreed ~~any~~that, ~~future~~once ~~labor~~a ~~agreements~~post-merger orrepresentative has been designated by the NMB, ~~effect~~there will be a thirty-day negotiations period, and, if ~~any~~no agreement is reached, a panel of arbitrators will set the remaining terms of the JCBAs that will become amendable on USDecember 31, ~~Airways’~~2018. ~~operations~~The oreconomic ~~financial~~terms ~~performance~~of the pilot JCBA established by the arbitration panel must conform with the contract that was reached with the two pilot groups. ~~For~~If ~~more~~the ~~discussion~~tentative agreement with the American mainline and US Airways mainline flight attendants is approved, ~~see~~negotiations over the terms ~~Part~~of I,a ~~Item~~JCBA will be conducted for up to 240 days. 1AIf no agreement can be reached, ~~Risk~~a ~~Factors~~panel –of ~~“Union~~arbitrators ~~disputes~~will establish the unresolved terms of the JCBA, ~~employee~~which ~~strikes~~is ~~and~~to ~~other~~be ~~labor-related~~set ~~disruptions~~based ~~may~~on ~~adversely~~economics ~~affect~~comparable ~~our~~to ~~operations~~those for flight attendants at other legacy airlines.”

~~Aviation~~The ~~Fuel~~merger will have no impact on the CBAs that cover the employees of our wholly-owned subsidiary airlines which are not being merged (Piedmont and PSA). For those employees, the RLA provides that CBAs do not expire, but instead become amendable as of a stated date.

~~The~~When ~~average~~a ~~cost~~RLA ofCBA abecomes ~~gallon~~amendable, ofif ~~aviation~~either ~~fuel~~party ~~for~~to ~~our~~the agreement wishes to modify its terms, it must notify the other party ~~mainline~~in the manner prescribed under the RLA and ~~express~~as ~~operations~~agreed ~~increased~~by 2the parties.0% ~~from~~Under ~~2011~~the toRLA, ~~2012~~the parties must meet for direct negotiations, and, ~~our~~if ~~total~~no ~~mainline~~agreement is reached, either party may request the NMB to appoint a federal mediator. The RLA prescribes no set timetable for the direct negotiation and ~~express~~mediation ~~fuel~~process. It ~~expense~~is ~~increased~~not ~~$131~~unusual ~~million,~~for orthose 2processes to last for many months and even for several years.9% If no agreement is reached in mediation, ~~from~~the ~~2011~~NMB in its discretion may declare under the RLA at some time that an impasse exists, and if an impasse is declared, the NMB proffers binding arbitration to ~~2012~~the parties. Either Weparty ~~estimate~~may decline to submit to binding arbitration. If arbitration is rejected by either party, an initial 30-day “cooling off” period commences. Following the conclusion of that a30-day ~~one~~“cooling ~~cent~~off” ~~per~~period, ~~gallon~~if ~~increase~~no inagreement ~~aviation~~has ~~fuel~~been ~~prices~~reached, ~~would result~~“self-help” in(as adescribed ~~$15~~below) ~~million~~can ~~increase~~begin inunless ~~annual~~a ~~expense~~Presidential Emergency ~~based~~Board on(“PEB”) ~~our~~is ~~2013~~established. ~~forecasted~~A ~~mainline~~PEB examines the parties’ positions and ~~express~~recommends ~~fuel~~a ~~consumption~~solution. The WePEB ~~have~~process ~~not~~lasts ~~entered~~for ~~into~~30 ~~any~~days ~~transactions~~and to(if ~~hedge~~no ~~our~~resolution ~~fuel~~is ~~consumption~~reached) is followed by another “cooling off” period of 30 days. At Asthe end of a ~~result~~“cooling off” period (unless an agreement is reached, wea ~~fully~~PEB ~~realize~~is established or action is taken by Congress), the ~~effects~~labor organization may exercise “self-help,” such as a strike, and the airline may resort to its own “self-help,” including the imposition of any ~~increase~~ or ~~decrease~~all inof ~~fuel~~its ~~prices~~proposed amendments and the hiring of new employees to replace any striking workers.

The ~~following~~NMB ~~table~~is ~~shows~~currently ~~annual~~mediating ~~aircraft~~negotiations ~~fuel~~with ~~consumption~~the ~~and~~IAM ~~costs~~covering ~~for~~the ~~our~~ mainline ~~operations~~US Airways fleet service employees, the ~~for~~mechanic ~~2010~~and ~~through~~related ~~2012~~employees, ~~(gallons~~and the store employees, and ~~aircraft~~with ~~fuel~~the ~~expense~~Association inof ~~millions~~Flight Attendants (“AFA”): covering the Piedmont flight attendants.

Year	Gallons		Average Priceper Gallon (1)		Aircraft FuelExpense (1)		Percentage of TotalOperating Expenses
2012		1,102	$	3.17	$	3,489		35.6	%
2011		1,095		3.11		3,400		35.8	%
2010		1,073		2.24		2,403		28.6	%

For more discussion, see Part I, Item 1A, Risk Factors – “Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations.”

~~(1)~~16 ~~Includes fuel taxes.~~

In addition,Table weof incur fuel expenses related to our express operations. Total fuel expenses for US Airways Group’s wholly owned regional airlines and affiliate regional airlines operating under capacity purchase agreements as US Airways Express for the years ended December 31, 2012, 2011 and 2010 were $1.10 billion, $1.06 billion and $769 million, respectively. Contents

Aircraft Fuel prices have fluctuated substantially over the past several years. We cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters, political disruptions or wars involving oil-producing countries, changes in fuel-related governmental policy, the strength of the U.S. dollar against foreign currencies, changes in access to petroleum product pipelines and terminals, speculation in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages, additional fuel price volatility and cost increases in the future. See Part I, Item 1A, Risk Factors – “Our business is dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity.”

~~Insurance~~In order to provide a more meaningful comparison to prior year results, certain financial results and operating statistics have been combined for the 2013 Successor and Predecessor Periods below.

WeOur ~~maintain~~operations and financial results are ~~insurance~~significantly ofaffected by the ~~types~~availability ~~that~~and weprice ~~believe~~of ~~are~~jet ~~customary~~fuel. inWhen combining the ~~airline~~2013 ~~industry.~~Successor ~~Principal~~and ~~coverage~~Predecessor ~~includes~~Periods, ~~liability~~the ~~for~~average ~~injury~~cost toof ~~members~~a gallon of ~~the~~jet ~~public,~~fuel ~~including~~for ~~passengers,~~our ~~damage~~mainline toand ~~property~~regional ofoperations USdecreased ~~Airways~~4.1% ~~Group,~~from ~~its~~2012 ~~subsidiaries~~to ~~and others~~2013, and our ~~loss~~total ofmainline orand ~~damage~~regional tofuel ~~flight~~expense ~~equipment,~~decreased ~~whether~~$54 onmillion, ~~the~~or ~~ground~~1.2%, orfrom in2012 ~~flight~~to 2013. WeBased ~~also~~on ~~maintain~~our ~~other~~2014 ~~types~~forecasted ofmainline ~~insurance~~and ~~such~~regional asfuel ~~workers’~~consumption, ~~compensation~~we ~~and~~estimate ~~employer’s~~that ~~liability~~as of December 31, ~~with~~2013, ~~limits~~a ~~and~~$1 ~~deductibles~~per ~~that~~barrel weincrease ~~believe~~in ~~are~~the ~~standard~~price ~~within~~of ~~the~~crude ~~industry~~oil would increase our 2014 annual fuel expense by $37 million.

~~Since~~The ~~September 11,~~following ~~2001,~~table weshows ~~and~~annual ~~other~~aircraft ~~airlines have been unable to obtain coverage for liability to~~fuel ~~persons~~consumption ~~other than employees~~ and ~~passengers for claims resulting from acts of terrorism~~costs, ~~war~~including ~~or similar events~~taxes, ~~which~~for isour ~~called~~mainline ~~war~~operations ~~risk~~for ~~coverage,~~2011 ~~at reasonable rates from the commercial insurance market. US Airways, therefore, purchased its war risk coverage~~ through a special program administered by the FAA, as have most other U.S. airlines. The Emergency Wartime Supplemental Appropriations Act extended this insurance protection until August 2005. The program was subsequently extended, with the same conditions and premiums, until September 30, 2013. If(gallons ~~the federal insurance program terminates, we would likely face a material increase in the cost of war risk coverage,~~ and ~~because~~aircraft offuel ~~competitive~~expense ~~pressures~~ in ~~the industry,~~millions): ~~our ability to pass this additional cost to passengers may be limited.~~


Year	Gallons		Average Price per Gallon		Aircraft Fuel Expense		Percentage of Total Operating Expenses
2013 (a)		1,144	$	3.04	$	3,481		33.8	%
2012		1,102		3.17		3,489		36.4	%
2011		1,095		3.11		3,400		36.6	%

~~Table~~(a) Represents combined 2013 Successor and Predecessor Periods to present a more meaningful basis of ~~Contents~~comparison to prior year.

~~Customer~~Total ~~Service~~fuel expenses for our wholly owned and third-party regional carriers operating under capacity purchase agreements for the 2013 Successor Period, 2013 Predecessor Period and the years ended December 31, 2012 and 2011 were $64 million, $988 million, $1.10 billion and $1.06 billion, respectively.

WeAs ~~are~~of ~~committed~~December 31, to2013, ~~consistently~~we ~~delivering~~have ~~safe,~~not ~~reliable~~entered ~~and~~into ~~convenient~~any ~~service~~transactions to hedge our ~~customers~~fuel inconsumption. ~~every~~As ~~aspect~~a result, we fully realize the effects of ~~our~~any ~~operation~~increase or decrease in fuel prices.

~~During~~Fuel ~~2012~~prices wehave ~~continued~~fluctuated ~~our~~substantially ~~work~~over tothe ~~enhance~~past several ~~our customers’ experience~~years. We ~~are~~cannot ~~continuing~~predict ~~our~~the ~~fleet~~future ~~replacement~~availability, ~~program~~price asvolatility ~~we replaced~~or 15cost ~~Boeing~~of ~~737~~ aircraft ~~with~~fuel. 12Natural ~~larger gauge~~disasters, ~~more~~political ~~modern~~disruptions ~~and~~or ~~fuel-efficient~~wars ~~new~~involving ~~Airbus~~oil-producing ~~A321~~countries, ~~aircraft.~~changes ~~Additionally,~~in wefuel-related ~~completed~~governmental policy, the ~~installation~~strength of the U.S. ~~Envoy~~dollar ~~Suite,~~against ~~the~~foreign ~~airline’s~~currencies, ~~fully~~changes ~~lie-flat~~in ~~business-class~~access ~~seats~~to ~~with~~petroleum anproduct ~~on-demand in-flight~~pipelines ~~entertainment~~and ~~system~~terminals, onspeculation ~~our~~in ~~fleet~~the ofenergy ~~wide-body~~futures ~~Airbus~~markets, ~~A330-300~~changes in aircraft fuel production capacity, ~~expanded~~environmental ~~our~~concerns ~~Wi-Fi~~and ~~internet~~other ~~service~~unpredictable toevents may ~~more~~result ~~than~~in ~~80%~~fuel ofsupply ~~our~~shortages, ~~domestic~~additional ~~Embraer~~fuel price volatility and ~~Airbus~~cost ~~narrow~~increases ~~body~~in ~~fleet,~~the ~~and~~future. ~~launched~~See ~~our~~Part ~~PreferredAccess~~I, ~~program~~Item 1A, ~~which~~Risk ~~gives~~Factors ~~our customers~~– ~~priority~~“Our ~~check~~business inis ~~and~~dependent ~~boarding.~~on Inthe ~~2012,~~price weand ~~also~~availability ~~launched~~of ~~DineFresh,~~aircraft afuel. ~~premium~~Continued periods ~~meal~~of ~~option~~high ~~for~~volatility ~~customers~~in ~~flying~~fuel incosts, ~~Economy~~increased ~~class~~fuel toprices ~~Europe,~~and significant disruptions in the ~~Middle~~supply ~~East~~of ~~and~~aircraft ~~South~~fuel ~~America,~~could ~~and~~have wea ~~are~~significant ~~the~~negative ~~only~~impact ~~U.S.-based~~on ~~carrier~~our tooperating ~~offer~~results ~~this~~and ~~service~~liquidity. ”

~~Outstanding~~Insurance efforts from our employees drove record operational performance in 2012, as we achieved our best on-time performance, highest completion factor and lowest mishandled baggage ratio in our Company’s history. During 2012 we also earned three first place monthly rankings for on-time performance and three first place monthly rankings for baggage handling among the big hub-and-spoke carriers as reported by the DOT Air Travel Consumer Report.

We ~~reported~~maintain insurance of the ~~following operating~~types ~~statistics~~that towe believe are customary in the ~~DOT~~airline industry, including insurance for ~~mainline~~public ~~operations~~liability, passenger liability, property damage and all-risk coverage for damage to our aircraft. Principal coverage includes liability for injury to members of the ~~years~~public, ~~ended~~including ~~December 31~~passengers, ~~2012~~damage to property of US Airways Group, its subsidiaries and ~~2011:~~others, and loss of or damage to flight equipment, whether on the ground or in flight. We also maintain other types of insurance such as workers’ compensation and employer’s liability, with limits and deductibles that we believe are standard within the industry.

	2012		2011		Better(Worse)
On-time performance (a)		85.9		79.8		6.1	pts
Completion factor (b)		99.0		98.4		0.6	pts
Mishandled baggage (c)		2.14		2.70		20.7	%
Customer complaints (d)		1.74		1.92		9.4	%

Since September 11, 2001, we and other airlines have been unable to obtain coverage for liability to persons other than employees and passengers for claims resulting from acts of terrorism, war or similar events, which is called war risk coverage, at reasonable rates from the commercial insurance market. We, therefore, purchased our war risk coverage through a special program administered by the FAA, as have most other U.S. airlines. This program, which currently expires September 30, 2014, has been extended numerous times in the past. If this program were not to be extended, we would likely face a material increase in the cost of war risk coverage, and because of competitive pressures in the industry, our ability to pass this additional cost to passengers may be limited. In addition, we have obtained third-party war risk (terrorism) insurance through a special program administered by the FAA, resulting in lower premiums than if we had obtained this insurance in the commercial insurance market. If the federal insurance program terminates, we would likely face a material increase in the cost of war risk insurance. See Part I, Item 1A, Risk Factors – “Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results.”

~~(a)~~17 ~~Percentage of reported flight operations arriving on time as defined by the DOT.~~

(b)Table Percentage of scheduled flight operations completed.Contents

~~(c)~~In ~~Rate~~addition, insurers significantly increased the premiums for aviation insurance in general following September 11, 2001. While the price of ~~mishandled~~commercial ~~baggage~~insurance ~~reports~~has ~~per~~declined 1since the period immediately after the terrorist attacks of September 11,~~000~~ ~~passengers~~2001, if commercial insurance carriers further reduce the amount of insurance coverage available to us or significantly increase its cost, we would be materially adversely affected.

~~(d)~~Customer ~~Rate~~Service ~~of customer complaints filed with the DOT per 100,000 enplanements.~~

17We are committed to consistently deliver safe, reliable and convenient service to our customers in every aspect of our operation. Our 2013 operating performance was negatively impacted by more severe weather conditions as compared to 2012. We reported the following operating statistics to the DOT for mainline operations for the years ended December 31, 2013 and 2012:


	2013		2012		Better (Worse)
On-time performance (a)		81.5		85.9		(4.4	) pts
Completion factor (b)		99.0		99.0		—	pts
Mishandled baggage (c)		2.52		2.14		(17.8	)%
Customer complaints (d)		1.42		1.74		18.4	%

~~Frequent~~(a) ~~Traveler~~Percentage ~~Program~~of reported flight operations arriving on time as defined by the DOT.

~~All~~(b) ~~major~~Percentage ~~airlines~~of ~~offer~~scheduled ~~frequent flyer programs to encourage travel on their respective airlines and customer loyalty. Our Dividend Miles® frequent flyer program allows participants to earn mileage credits for each paid~~ flight ~~segment~~operations ~~on US Airways, Star Alliance carriers and certain other airlines that participate in the program~~completed. Participants flying in first class or Envoy class may receive additional mileage credits. Participants can also receive mileage credits through special promotions that we periodically offer and may also earn mileage credits by utilizing certain credit cards and purchasing services from non-airline partners such as hotels and rental car agencies. We sell mileage credits to credit card companies, hotels, car rental agencies and others that participate in the Dividend Miles program. Mileage credits can be redeemed for travel awards on US Airways, Star Alliance carriers or other participating airlines.

We(c) ~~and~~Rate ~~the~~of ~~other~~mishandled ~~participating~~baggage ~~airline~~reports ~~partners limit the number of seats~~ per ~~flight that are available for redemption by award recipients by using various inventory management techniques. Award travel is generally not permitted on blackout dates~~1,000 ~~which correspond to certain holiday periods or peak travel dates~~passengers. We charge various fees for issuing awards dependent upon destination and booking method and for issuing awards within 21 days of the travel date. We reserve the right to terminate Dividend Miles or portions of the program at any time. Program rules, partners, special offers, blackout dates, awards and requisite mileage levels for awards are subject to change.

~~Ticket~~(d) ~~Distribution~~Rate of customer complaints filed with the DOT per 100,000 enplanements.

~~Passengers~~Frequent ~~can~~Flyer ~~book~~Program tickets for travel on US Airways through several distribution channels including our direct website (www.usairways.com), our reservations centers and third party distribution channels, including those provided by or through global distribution systems (e.g., Amadeus, Sabre and Travelport), conventional travel agents and online travel agents (e.g., Expedia, Orbitz and Travelocity). In 2012, internal channels of distribution accounted for 36% of our ticketed passenger segments. Internet sites accounted for 61% of our ticketed passenger segments, of which 31% originated from our website, while 30% originated from online travel agent sites. To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility and improve the functionality of third party distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part 1, Item 1A, Risk Factors – “We rely on third party distribution channels and must manage effectively the costs, rights and functionality of these channels.”

~~Seasonality~~Our Dividend Miles® frequent flyer program allows participants to earn mileage credits for each paid flight segment on US Airways, American, Star Alliance carriers and certain other airlines that participate in the program. Participants flying in first class or our international business class (Envoy class) may receive additional mileage credits. Participants can also receive mileage credits through special promotions that we periodically offer and may also earn mileage credits by utilizing certain credit cards and purchasing services from non-airline partners such as hotels and rental car agencies. We sell mileage credits to credit card companies, hotels, car rental agencies and others that participate in the Dividend Miles program. Mileage credits can be redeemed for travel awards on US Airways, American, Star Alliance carriers or other participating airlines. Effective March 31, 2014 US Airways will join the oneworld alliance and exit the Star Alliance. At that point, frequent flyer program reciprocity will begin with oneworld partner airlines and will be discontinued for many Star Alliance airlines.

~~Our~~We ~~results~~and ~~are~~the ~~seasonal.~~other ~~Due~~participating airline topartners limit the ~~greater~~number ~~demand~~of seats per flight that are available for ~~air~~redemption ~~and~~by ~~leisure~~award recipients by using various inventory management techniques. Award travel ~~during~~is ~~the~~generally ~~summer~~not ~~months~~permitted on blackout dates, ~~revenues~~which incorrespond ~~the~~to ~~airline~~certain holiday ~~industry~~periods inor ~~the~~peak ~~second~~travel dates. We charge various fees for issuing awards dependent upon destination and ~~third~~booking ~~quarters~~method and for issuing awards within 21 days of the ~~year~~travel ~~tend~~date. We reserve the right to beterminate ~~greater than~~Dividend ~~revenues~~Miles inor portions of the ~~first~~program at any time. Program rules, partners, special offers, blackout dates, awards and ~~fourth~~requisite ~~quarters~~mileage oflevels ~~the~~for ~~year~~awards are subject to change.

18Effective January 7, 2014, members of American’s AAdvantage® frequent flyer program (“AAdvantage”) and Dividend Miles members can earn and redeem miles when traveling across either airline’s network. All travel on eligible tickets on both airlines will count toward qualification for elite status in the customer’s program of choice. Elite members of each airline can enjoy select reciprocal benefits of both the AAdvantage and Dividend Miles programs, including First and Business Class check-in, priority security and priority boarding, complimentary access to Preferred Seats, priority baggage delivery and checked bags at no charge, consistent with the current baggage policies for each carrier.

~~Table~~The ofUS ~~Contents~~Airways Dividend Miles program will transition to the AAdvantage® frequent flyer program as soon as commercially feasible.

~~Item 1A.~~18 ~~Risk Factors~~

BelowTable are certain risk factors that may affect our business, results of operations or financial condition, or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination thereof, may impact our business. Contents

~~Risk~~Ticket ~~Factors~~Distribution ~~Relating to the Company and Industry-Related Risks~~

Passengers can book tickets for travel on American or US Airways ~~Group~~through ~~could~~several ~~experience~~distribution ~~significant~~channels ~~operating~~including ~~losses~~their indirect websites (www.aa.com and www.usairways.com), our reservations centers and third-party distribution channels, including those provided by or through global distribution systems (e.g., Amadeus, Sabre and Travelport), conventional travel agents and online travel agents (e.g., Expedia, Orbitz and Travelocity). In 2013, internal channels of distribution accounted for 38% of our ticketed passenger segments. Internet sites accounted for 61% of our ticketed passenger segments, of which 33% originated from our website, while 28% originated from online travel agent sites. To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility and improve the ~~future~~functionality of third-party distribution channels, while maintaining an industry-competitive cost structure. For more discussion, see Part 1, Item 1A, Risk Factors – “We rely on third-party distribution channels and must manage effectively the costs, rights and functionality of these channels.”

~~For~~Seasonality ~~a number of reasons, including those addressed in these risk factors, US Airways Group might fail to achieve profitability~~ and ~~might~~Other ~~experience~~Factors significant losses. In particular, the condition of the economy and the high volatility of fuel prices have had and continue to have an impact on our operating results, and increase the risk that we will experience losses.

~~Downturns~~Due to the greater demand for air and leisure travel during the summer months, revenues in the airline industry in the second and third quarters of the year tend to be greater than revenues in the first and fourth quarters of the year. General economic conditions, ~~adversely~~fears ~~affect~~of ~~our~~terrorism ~~business~~or war, fare initiatives, fluctuations in fuel prices, labor actions, weather, natural disasters, outbreaks of disease and other factors could impact this seasonal pattern. Accordingly, the results of operations for any interim period are not necessarily indicative of those for the entire year.

~~Due~~See toNote ~~the~~15 ~~discretionary~~to ~~nature of business and leisure travel spending, airline industry revenues are heavily influenced by~~ the ~~condition~~ ofconsolidated ~~the~~financial ~~U.S.~~statements ~~economy and economies in other regions~~ of ~~the~~US ~~world.~~Airways ~~Unfavorable~~Group ~~conditions in these broader economies have resulted,~~ and ~~may~~US ~~result~~Airways in ~~the~~Part ~~future~~II, inItems ~~decreased~~8A ~~passenger demand for air travel~~ and ~~changes in booking practices~~8B, ~~both of which in turn have had~~respectively, ~~and~~for ~~may have in~~ the ~~future,~~unaudited aquarterly ~~strong~~financial ~~negative~~data ~~effect~~for on our revenues. In addition, during challenging economic times, actions by our competitors to increase their revenues can have an adverse impact on our revenues. See “The airline industry is intensely competitive and dynamic” below. Certain labor agreements to which we are a party limit our ability to reduce the ~~number~~two-year ofperiod ~~aircraft~~ended ~~in operation~~December 31, ~~and the utilization of such aircraft, below certain levels~~2013. ~~As a result, we may not be able to optimize the number of aircraft in operation in response to a decrease in passenger demand for air travel.~~

~~Our~~Available ~~business~~Information is dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity.

~~Our~~A ~~operating~~copy ~~results are~~of ~~materially~~this ~~impacted~~Annual byReport ~~changes~~on inForm 10-K, ~~the~~Quarterly ~~availability~~Reports on Form 10-Q, ~~price~~Current ~~volatility~~Reports on Form 8-K and amendments ~~cost~~to ofthose ~~aircraft~~reports ~~fuel,~~filed ~~which~~or ~~represents~~furnished ~~one~~pursuant ofto ~~the~~Section 13(a) ~~largest~~or ~~single~~15(d) ~~cost~~of ~~items~~the inSecurities ~~our~~Exchange ~~business.~~Act ~~Jet~~of ~~fuel~~1934, ~~market~~as ~~prices~~amended ~~have~~(the ~~fluctuated~~Exchange ~~substantially~~Act), ~~over~~are ~~the~~available ~~past~~free ~~several years~~of ~~with~~charge ~~market~~at ~~spot~~www.usairways.com ~~prices~~as ~~ranging~~soon ~~from~~as areasonably ~~low~~practicable after ofwe ~~approximately~~electronically ~~$1.87~~file ~~per~~such ~~gallon~~material towith, aor ~~high~~furnish ofit ~~approximately~~to, ~~$3.38~~the ~~per~~SEC ~~gallon~~and ~~during~~at the ~~period~~website ~~from~~maintained ~~January 1,~~by ~~2010~~the toSEC ~~December 31,~~at ~~2012~~www.sec.gov.

~~Because~~From ofand after the ~~amount~~Merger ofon ~~fuel~~December ~~needed~~9, ~~to operate our airline~~2013, ~~even~~US aAirways ~~relatively~~Group ~~small~~and ~~increase~~US inAirways ~~the~~are ~~price~~wholly-owned subsidiaries of ~~fuel~~AAG. ~~can~~AAG ~~have a material~~has ~~adverse~~filed ~~aggregate~~with ~~effect~~the onSEC ~~our~~an ~~costs~~Annual ~~and~~Report ~~liquidity.~~on ~~Due~~Form to10-K ~~the~~for ~~competitive nature of~~ the ~~airline~~year ~~industry~~ended ~~and~~December ~~unpredictability~~31, of2013. ~~the~~This ~~market,~~report weand ~~can~~other ~~offer~~reports noand ~~assurance~~documents ~~that~~filed wewith ~~may~~or befurnished ~~able~~ to ~~increase~~the ~~our~~SEC ~~fares,~~are ~~impose~~available ~~fuel~~free ~~surcharges~~of orcharge ~~otherwise increase~~at ~~revenues~~www.aa.com ~~sufficiently~~and tothe ~~offset~~website ~~fuel~~maintained ~~price~~by ~~increases~~the SEC at www.sec.gov.

~~Although~~US weAirways ~~are~~Group ~~currently~~and ~~able~~US Airways have made and expect to ~~obtain~~make ~~adequate~~public ~~supplies~~disclosures of certain ~~aircraft~~information ~~fuel,~~regarding weUS ~~cannot~~Airways ~~predict~~Group ~~the~~and ~~future~~its ~~availability~~subsidiaries, ~~price~~to ~~volatility~~investors orand ~~cost~~the general public by means of ~~aircraft~~social ~~fuel.~~media ~~Natural~~sites, ~~disasters~~including, ~~political~~but ~~disruptions~~not orlimited ~~wars~~to, ~~involving~~Facebook ~~oil-producing~~and ~~countries,~~Twitter ~~changes~~and ina ~~fuel-related~~website ~~governmental~~maintained ~~policy,~~by ~~the~~AAG ~~strength~~and ofUS ~~the U~~Airways Group.S. ~~dollar~~Investors ~~against~~are encouraged ~~foreign~~to ~~currencies,~~(i) follow ~~changes~~US inAirways ~~access~~(@USAirways toand ~~petroleum~~@USEmployees) ~~product~~on ~~pipelines~~Twitter; ~~and~~(ii) “like” ~~terminals,~~US ~~speculation~~Airways’ in(www.facebook.com/USAirways) ~~the~~Facebook ~~energy~~page; ~~futures~~(iii) follow ~~markets,~~US ~~changes~~Airways in(www.pinterest.com/FlyUSAirways) ~~aircraft~~on Pinterest; ~~fuel~~(iv) follow ~~production~~US ~~capacity,~~Airways ~~environmental~~(www.instagram.com/USAirways) ~~concerns~~on ~~and~~Instagram; ~~other~~(v) subscribe ~~unpredictable~~to ~~events may~~US ~~result~~Airways in(www.youtube.com/user/usairways) ~~fuel~~on ~~supply~~YouTube; ~~shortages,~~and ~~additional~~(vi) visit ~~fuel~~http://www.aa.com/arriving ~~price~~or usairways.com/arriving ~~volatility~~for ~~and~~updated ~~cost~~information ~~increases~~regarding inAAG, US Airways Group, and the ~~future~~Merger.

~~Historically,~~Neither weUS ~~have~~Airways ~~from~~Group ~~time~~nor toUS ~~time~~Airways ~~entered~~incorporates ~~into hedging arrangements designed to protect against rising fuel costs. Currently, we are not a party to any transactions to hedge our fuel consumption. Our ability to hedge in~~ the ~~future~~contents ~~may~~of ~~be limited~~its, ~~particularly~~AAG’s if our financial condition provides insufficient liquidity to meet counterparty collateral requirements. Our future fuel hedging arrangements, if any, may not completely protect us against price increases and ~~may~~American’s besocial ~~limited~~media ~~in both volume of fuel and duration. Also~~sites, aposts ~~rapid~~or ~~decline in the projected price of fuel at a time when we have fuel hedging contracts in place could adversely impact~~ our ~~short-term~~websites ~~liquidity, because hedge counterparties could require that we post collateral in the form of cash~~ or ~~letters~~other offilings ~~credit.~~into ~~See~~this ~~also~~Form ~~the~~10-K ~~discussion~~except inas ~~Part II,~~specifically ~~Item 7A,~~set ~~“Quantitative~~forth ~~and Qualitative Disclosures About Market Risk~~herein.”

~~The~~Item ~~airline industry is intensely competitive and dynamic~~1A. Risk Factors

~~Our~~Below ~~competitors~~are ~~include~~certain ~~other~~risk ~~major~~factors ~~domestic~~that ~~airlines~~may ~~and~~affect ~~foreign,~~our ~~regional and new entrant airlines~~business, ~~many~~results of ~~which~~operations ~~have~~and ~~more~~ financial ~~resources~~ ~~or lower cost structures than ours~~condition, asor ~~well~~the astrading price ~~other forms~~ of ~~transportation,~~our ~~including~~common ~~rail~~stock ~~and~~or ~~private~~other ~~automobiles~~securities. InWe ~~many~~caution ofthe ~~our~~reader ~~markets~~that wethese ~~compete~~risk ~~with~~factors atmay ~~least~~not ~~one~~be ~~low-cost air carrier~~exhaustive. ~~Our~~We ~~revenues~~operate ~~are sensitive to the actions of other carriers~~ in ~~many~~a ~~areas~~continually ~~including~~changing ~~pricing,~~business ~~scheduling~~environment, ~~capacity~~ and ~~promotions,~~new ~~which~~risks ~~can~~and ~~have~~uncertainties aemerge ~~substantial~~from ~~adverse~~time ~~impact~~to ~~not only on our revenues, but on overall industry revenues~~time. ~~These factors may become even more significant in periods~~Management ~~when~~cannot ~~the~~predict ~~industry~~such ~~experiences~~new ~~large~~risks ~~losses,~~and ~~as airlines under financial stress~~uncertainties, ornor incan ~~bankruptcy,~~it ~~may~~assess ~~institute~~the ~~pricing~~extent ~~structures intended~~ to ~~achieve~~which ~~near-term~~any ~~survival~~of ~~rather~~the ~~than~~risk ~~long-term~~factors ~~viability.~~below Inor ~~addition,~~any ~~because~~such anew ~~significant~~risks ~~portion~~and ~~of our~~uncertainties, ~~traffic~~or isany ~~short-haul~~combination ~~travel~~thereof, wemay ~~are~~impact ~~more~~our ~~susceptible than other major airlines to competition from surface transportation such as automobiles and trains~~business.

~~Low-cost~~Risk ~~carriers~~Factors ~~have~~Relating ato ~~profound impact on industry revenues. Using~~ the ~~advantage~~Company of low unit costs, these carriers offer lower fares in order to shift demand from larger, more-established airlines. Some low-cost carriers, which have cost structures lower than ours, have better financial performance and ~~significant numbers of aircraft on order for delivery in the next few years. These low~~Industry-~~cost~~Related ~~carriers~~Risks ~~are expected to continue to increase their market share through growth and, potentially, consolidation, and could continue to have an impact on our overall performance.~~

~~Additionally,~~We as mergers and other forms of industry consolidation, including antitrust immunity grants, take place, we might or might not be included as a participant. Depending on which carriers combine and which assets, if any, are sold or otherwise transferred to other carriers in connection with such combinations, our competitive position relative to the post-combination carriers or other carriers that acquire such assets could beexperience ~~harmed.~~significant Inoperating ~~addition,~~losses ~~as carriers combine through traditional mergers or antitrust immunity grants, their route networks will grow, and that growth will result~~ in ~~greater overlap with our network, which in turn could result in lower overall market share and revenues for us. Such consolidation is not limited to~~ the Ufuture.~~S.,~~ ~~but could include further consolidation among international carriers in Europe and elsewhere.~~

~~Also~~For ~~see~~a ~~the~~number of reasons, including those addressed in these risk factors, ~~provided~~we ~~under~~might fail to achieve or maintain profitability and might experience significant losses. In particular, the ~~caption~~condition ~~“Risk~~of ~~Factors~~the ~~Relating~~economy, the level and volatility of fuel prices, the state of travel demand and intense competition in the airline industry have had and will continue to have an impact on our operating results, and may increase the ~~Merger~~risk that we will experience losses.”

~~Increased~~Downturns ~~costs of financing, a reduction~~ in ~~the~~economic ~~availability of financing and fluctuations in interest rates could adversely~~conditions adversely affect our ~~liquidity, operating expenses and results~~business.

~~Concerns~~Due ~~about~~to the ~~systemic~~discretionary ~~impact~~nature of ~~inflation~~business and leisure travel spending, ~~the~~airline ~~availability~~industry ~~and~~revenues ~~cost~~are ofheavily ~~credit,~~influenced ~~energy~~by ~~costs~~the ~~and~~condition ~~geopolitical~~of ~~issues,~~the ~~combined~~U.S. ~~with~~economy ~~continued~~and ~~changes~~economies in ~~business~~other ~~activity~~regions ~~levels~~of ~~and~~the ~~consumer~~world. ~~confidence,~~Unfavorable ~~increased~~conditions ~~unemployment~~in ~~and~~these ~~volatile~~broader ~~oil~~economies ~~prices,~~ have ~~contributed~~resulted, toand ~~unprecedented~~may ~~levels~~result ~~of volatility~~ in the ~~capital~~future, ~~markets.~~in Asdecreased apassenger ~~result~~demand for ofair ~~these~~travel ~~market~~and ~~conditions,~~changes ~~the~~in ~~cost~~booking ~~and~~practices, ~~availability~~both of ~~credit~~which in turn have ~~been~~had, and may ~~continue~~have toin bethe ~~adversely~~future, ~~affected~~a bystrong ~~illiquid~~negative ~~credit~~effect ~~markets~~on ~~and~~our ~~wider~~revenues. ~~credit~~In ~~spreads.~~addition, ~~These~~during ~~changes~~challenging ineconomic ~~the~~times, ~~domestic~~actions ~~and global~~by ~~financial~~our ~~markets~~competitors ~~may~~to increase ~~our~~their revenues ~~costs~~can ofhave ~~financing~~an ~~and~~adverse ~~adversely~~impact ~~affect~~on our ~~ability~~revenues. toSee ~~obtain~~“The ~~financing~~airline ~~needed~~industry ~~for~~is ~~the~~intensely ~~acquisition~~competitive ofand ~~aircraft~~dynamic” ~~that~~below. weCertain ~~have~~labor ~~contractual~~agreements ~~commitments~~ to ~~purchase~~which ~~and~~we ~~for~~are ~~other~~a ~~types~~party oflimit ~~financings~~our weability ~~may~~to ~~seek in~~reduce ~~order~~the tonumber ~~refinance~~of ~~debt~~aircraft ~~maturities~~in operation, ~~raise~~and ~~capital~~the orutilization ~~fund~~of ~~other~~such ~~types~~aircraft, ofbelow ~~obligations~~certain levels. ~~Any~~As ~~downgrades~~a toresult, ~~our~~we ~~credit~~may ~~rating~~not ~~may~~be ~~likewise~~able ~~increase~~to optimize the ~~cost~~number ~~and~~of ~~reduce~~aircraft ~~the~~in ~~availability~~operation ofin ~~financing~~response to a decrease in passenger demand for air travel.

InOur ~~addition,~~business weis ~~have~~dependent ~~substantial~~on ~~non-cancelable commitments for capital expenditures, including~~ the ~~acquisition~~price ~~of new aircraft~~ and ~~related~~ ~~spare engines. We have not yet secured financing commitments for four Airbus aircraft scheduled for delivery after November 2013, and cannot assure you of the~~ availability ~~or cost~~ of ~~that~~aircraft ~~financing~~fuel. IfContinued weperiods ~~are~~of ~~not~~high ~~able~~volatility toin ~~arrange financing~~fuel ~~for~~costs, ~~such~~increased ~~aircraft~~fuel atprices ~~customary advance rates~~ and onsignificant ~~terms~~disruptions ~~and~~in ~~conditions~~the ~~acceptable~~supply ~~to us, we expect we would seek to negotiate deferrals~~ of aircraft ~~deliveries~~fuel ~~with~~could ~~the~~have ~~manufacturer~~a orsignificant ~~financing~~negative atimpact ~~lower~~on ~~than~~our ~~customary~~operating ~~advance~~results ~~rates,~~and ~~or, if required, use cash from operations or other sources to purchase the aircraft~~liquidity.

20Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in our business. Jet fuel market prices have fluctuated substantially over the past several years and prices continued to be volatile in 2013.

~~Table~~Because of ~~Contents~~the amount of fuel needed to operate our business, even a relatively small increase in the price of fuel can have a material adverse aggregate effect on our operating results and liquidity. Due to the competitive nature of the airline industry and unpredictability of the market, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues sufficiently to offset fuel price increases.

~~Further,~~Although awe ~~substantial~~are ~~portion~~currently ofable ~~our~~to obtain ~~indebtedness~~adequate ~~bears~~supplies ~~interest~~of ataircraft ~~fluctuating interest rates~~fuel, ~~primarily~~we ~~based~~cannot onpredict the ~~London~~future ~~interbank~~availability, ~~offered~~price ~~rate~~volatility ~~for~~or ~~deposits~~cost of ~~U.S. dollars~~aircraft ~~(“LIBOR”)~~fuel. ~~LIBOR~~Natural ~~tends~~disasters, topolitical ~~fluctuate~~disruptions ~~based~~or onwars ~~general~~involving ~~economic~~oil-producing ~~conditions~~countries, ~~general~~changes ~~interest~~in ~~rates~~fuel-related governmental policy, ~~Federal Reserve rates and~~ the ~~supply~~strength of ~~and demand for credit in~~ the ~~London interbank market~~U.S. Wedollar ~~have~~against ~~not~~foreign ~~hedged our interest rate exposure and~~currencies, ~~accordingly,~~changes ~~our~~in ~~interest~~access ~~expense~~to ~~for~~petroleum ~~any~~product ~~particular~~pipelines ~~period may fluctuate based on LIBOR~~ and ~~other~~terminals, ~~variable~~speculation ~~interest~~in ~~rates. To~~ the ~~extent~~energy ~~these interest~~futures ~~rates increase~~markets, ~~our~~changes ~~interest expense will increase,~~ in ~~which~~aircraft ~~event~~fuel weproduction ~~may~~capacity, ~~have~~environmental ~~difficulties~~concerns ~~making interest payments~~ and ~~funding our~~ other ~~fixed~~unpredictable ~~costs,~~events ~~and our available cash flow for general corporate requirements~~ may beresult ~~adversely affected.~~in ~~See~~fuel ~~also~~supply ~~the~~shortages, ~~discussion~~additional offuel ~~interest~~price ~~rate~~volatility ~~risk in Part II, Item 7A, “Quantitative~~ and ~~Qualitative~~cost ~~Disclosures~~increases ~~About~~in ~~Market~~the ~~Risk~~future.”

~~Our~~We ~~high~~have ~~level~~a large number of ~~fixed~~older ~~obligations~~aircraft ~~limits~~in our ~~ability~~fleet, toand ~~fund~~these ~~general~~aircraft ~~corporate~~are ~~requirements~~not ~~and~~as ~~obtain~~fuel ~~additional~~efficient ~~financing~~as more recent models of aircraft, ~~limits~~including ~~our~~those ~~flexibility~~we inhave ~~responding~~on order. We intend to ~~competitive~~continue ~~developments~~to ~~and increases~~execute our ~~vulnerability~~fleet renewal plans to, ~~adverse~~among ~~economic~~other things, improve the fuel efficiency of our fleet, and ~~industry~~we ~~conditions~~are dependent on a limited number of major aircraft manufacturers to deliver aircraft on schedule. If we experience delays in delivery of the more fuel efficient aircraft that we have on order, we will be adversely affected.

WeOur ~~have~~aviation afuel ~~significant~~purchase ~~amount~~contracts ofgenerally ~~fixed~~do not provide meaningful price protection against increases in fuel costs. ~~obligations,~~Prior ~~including~~to ~~debt~~the closing of the Merger, ~~aircraft~~AAG ~~leases~~sought ~~and~~to ~~financings~~manage the risk of fuel price increases by using derivative contracts. There can be no assurance that, ~~aircraft~~at ~~purchase~~any ~~commitments~~given time, ~~leases~~we ~~and~~will ~~developments~~have derivatives in place to provide any particular level of protection ~~airport~~against ~~and~~increased ~~other~~fuel ~~facilities~~costs ~~and~~or ~~other~~that ~~cash~~our ~~obligations~~counterparties will be able to perform under our derivative contracts. WeTo ~~also~~the extent we use derivative contracts that have ~~certain~~the ~~guaranteed~~potential ~~costs~~to ~~associated~~create ~~with~~an ~~our~~obligation ~~express~~to pay upon settlement if prices ~~operations~~decline significantly, such derivative contracts may limit our ability to benefit from lower fuel costs in the future. ~~Our~~Also, ~~existing~~a ~~indebtedness~~rapid isdecline ~~secured~~in bythe ~~substantially~~projected ~~all~~price of fuel at a time when we have fuel hedging contracts in place could adversely impact our ~~assets~~short-term liquidity, because hedge counterparties could require that we post collateral in the form of cash or letters of credit. See also the discussion in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”

As20 ~~a result of the substantial fixed costs associated with these obligations:~~

•Table aof decrease in revenues results in a disproportionately greater percentage decrease in earnings;Contents

•In weaddition, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and regulations promulgated by the Commodity Futures Trading Commission (“CFTC”) introduce new requirements for centralized clearing for over-the-counter derivatives. This may ~~not~~include ~~have~~our ~~sufficient~~fuel ~~liquidity~~derivative tocontracts. ~~fund~~Our ~~all~~board of directors ~~these~~has ~~fixed~~approved ~~costs~~our ifelection of the CFTC’s end-user exemption, which permits us as a non-financial end user of derivatives to hedge commercial risk and be exempt from the CFTC mandatory clearing requirements. However, depending on the final regulations adopted by the CFTC and other regulators, our ~~revenues~~derivative ~~decline~~contract orcounterparties may be subject to regulatory requirements and resulting new practices that may raise their costs. ~~increase;~~Those increased costs may in turn be passed on to us, resulting in increased transaction costs to execute derivative contracts and lower credit thresholds to post collateral.

•We wehave ~~may~~not ~~have~~entered tointo ~~use~~any fuel hedges since the Effective Date and our ~~working~~current ~~capital~~policy is not to ~~fund~~do ~~these~~so. ~~fixed~~Assuming ~~costs~~we ~~instead~~continue to ofpursue ~~funding~~this ~~general~~policy, ~~corporate~~once ~~requirements~~our existing hedge contracts expire or otherwise terminate, ~~including~~we ~~capital~~will ~~expenditures~~be fully exposed to fluctuations in fuel prices.

~~These~~The ~~obligations~~airline ~~also~~industry ~~impact~~is ~~our~~intensely ~~ability~~competitive ~~to obtain additional financing, if needed,~~ and ~~our flexibility in the conduct of our business~~dynamic.

~~Any~~Our ~~failure~~competitors toinclude ~~comply~~other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by some of these airlines, many of which have more financial or other resources and/or lower cost structures than ours, as well as other forms of transportation, including rail and private automobiles. In many of our markets we compete with at least one low-cost air carrier. Our revenues are sensitive to the ~~liquidity~~actions ~~covenants~~of ~~contained~~other carriers in ~~our~~many ~~financing~~areas ~~arrangements would~~including ~~likely~~pricing, scheduling, capacity and promotions, which can have a ~~material~~substantial adverse ~~effect~~impact not only on our ~~business~~revenues, but on overall industry revenues. These factors may become even more significant in periods when the industry experiences large losses, as airlines under financial ~~condition~~stress, ~~and~~or ~~results~~in ofbankruptcy, ~~operations~~may institute pricing structures intended to achieve near-term survival rather than long-term viability.

~~The~~Low-cost ~~terms of~~carriers ~~our~~have ~~Citicorp~~a ~~credit~~profound ~~facility~~impact ~~and~~on ~~certain~~industry revenues. Using the advantage of ~~our~~low ~~other~~unit ~~financing~~costs, ~~arrangements~~these ~~require~~carriers usoffer lower fares in order to ~~maintain~~shift ~~consolidated~~demand ~~unrestricted~~from ~~cash~~larger, ~~and~~more ~~cash~~established ~~equivalents~~airlines. ofSome ~~not~~low-cost ~~less~~carriers, which have cost structures lower than ~~$850 million~~ours, ~~with~~have ~~not~~better ~~less~~recent ~~than~~financial ~~$750 million~~performance ~~(subject~~and have announced growth strategies including commitments to ~~partial reductions~~acquire ~~upon~~significant ~~certain~~numbers ~~reductions~~of aircraft for delivery in the ~~outstanding~~next ~~principal~~few ~~amount~~years. ofThese ~~the~~low-cost ~~loan)~~carriers ofare ~~that~~expected ~~amount~~to ~~held~~continue into ~~accounts~~increase ~~subject~~their market share through growth and, potentially, consolidation, and could continue to ~~control~~have ~~agreements~~an impact on our overall performance.

~~Our~~Certain ~~ability~~airline toalliances ~~comply~~have ~~with~~been, ~~these~~or may ~~covenants~~in ~~while~~the ~~paying~~future ~~the~~be, ~~fixed~~granted ~~costs~~immunity ~~associated~~from ~~with~~antitrust ~~our~~regulations ~~contractual~~by ~~obligations~~governmental ~~and~~authorities ~~our~~for ~~other~~specific ~~expenses~~areas ~~will~~of ~~depend~~cooperation, onsuch ~~our~~as ~~operating~~joint ~~performance~~pricing ~~and~~decisions. ~~cash~~To ~~flow,~~the ~~which~~extent ~~are seasonal,~~alliances asformed ~~well~~by asour ~~factors~~competitors ~~including~~can ~~fuel~~undertake ~~costs~~activities ~~and~~that ~~general~~are ~~economic~~not available ~~and~~to ~~political~~us, ~~conditions~~our ability to effectively compete may be hindered.

~~The~~American ~~factors~~has ~~affecting~~implemented ~~our~~a JBA with British Airways, ~~liquidity~~Iberia (and ~~our~~Finnair, ~~ability~~and toantitrust-immunized ~~comply~~cooperation with ~~related~~British ~~covenants)~~Airways, ~~will~~Iberia, ~~remain~~Finnair ~~subject~~and toRoyal ~~significant~~Jordanian. ~~fluctuations~~American ~~and~~is ~~uncertainties,~~in ~~many~~negotiations ofwith IAG concerning the terms by which ~~are~~flights ~~outside~~operated ~~our~~by ~~control~~US Airways will be added to American’s existing transatlantic JBA. ~~Any~~American ~~breach~~has ofthus ~~our~~far ~~liquidity~~been ~~covenants~~unable orto ~~failure~~reach agreement with IAG and is uncertain if it will be able to ~~timely~~reach ~~pay~~an ~~our~~agreement. ~~obligations could~~Failure ~~result~~to inreach aan ~~variety~~agreement ofcould have a material adverse ~~consequences,~~effect ~~including~~on the ~~acceleration~~JBA ofor ~~our~~cause ~~indebtedness~~its dissolution, ~~the~~which ~~withholding~~could ofalso ~~credit~~have ~~card~~a ~~proceeds~~material byadverse ~~our~~effect ~~credit~~on ~~card~~AAG’s ~~processors~~results ~~and~~of ~~the~~operations ~~exercise~~or offinancial ~~remedies~~position. byIn ~~our~~addition, ~~creditors~~American ~~and~~has ~~lessors.~~implemented Inan ~~such~~antitrust-immunized JBA with Japan Airlines and a ~~situation, it~~JBA iswith ~~unlikely~~Qantas. ~~that~~No weassurances ~~would~~can be given ~~able~~as to ~~fulfill~~any ~~our~~other ~~contractual~~arrangements ~~obligations,~~that ~~repay~~may ~~the~~ultimately ~~accelerated~~be ~~indebtedness,~~implemented ~~make~~or ~~required~~any ~~lease~~benefits ~~payments~~that orAAG ~~otherwise~~may ~~cover~~derive ~~our~~from ~~fixed~~such ~~costs~~arrangements.

21Additional mergers and other forms of industry consolidation, including antitrust immunity grants, may take place and may not involve us as a participant. Depending on which carriers combine and which assets, if any, are sold or otherwise transferred to other carriers in connection with such combinations, our competitive position relative to the post-combination carriers or other carriers that acquire such assets could be harmed. In addition, as carriers combine through traditional mergers or antitrust immunity grants, their route networks will grow, and that growth will result in greater overlap with our network, which in turn could result in lower overall market share and revenues for us. Such consolidation is not limited to the U.S., but could include further consolidation among international carriers in Europe and elsewhere.

~~Table~~21 ~~of Contents~~

IfTable ourof financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect our liquidity. Contents

We ~~have~~may ~~agreements~~be ~~with~~unable ~~companies~~to ~~that~~integrate ~~process~~operations ~~customer credit~~successfully ~~card transactions for the sale of air travel~~ and ~~other~~realize ~~services. These agreements allow these processing companies, under certain conditions, to hold an amount of our cash (referred to as a “holdback”) equal to some or all of~~ the ~~advance~~anticipated ~~ticket~~synergies sales that have been processed by that company, but for which we have not yet provided the air transportation. We are currently subject to certain holdback requirements. These holdback requirements can be modified at the discretion of the processing companies upon the occurrence of specific events, including material adverse changes in our financial condition. An increase in the current holdback balances to higher percentages up to and ~~including 100% of relevant advanced ticket sales could materially reduce our liquidity. Likewise,~~ other ofbenefits ~~our commercial agreements contain provisions that allow other entities to impose less favorable terms, including the acceleration~~ of ~~amounts due, in~~ the ~~event of material adverse changes in our financial condition~~Merger.

~~Union~~The ~~disputes,~~Merger ~~employee~~involves ~~strikes~~the combination of two companies that operated as independent public companies prior to the Merger, and ~~other~~each ~~labor-related~~of ~~disruptions~~which ~~may~~operated ~~adversely~~its own international network airline. Historically, the integration of separate airlines has often proven to be more time consuming and to require more ~~affect~~resources than initially estimated. We must devote significant management attention and resources to integrating our business practices, cultures and operations. Potential difficulties we may encounter as part of the integration process include the following:

~~Relations~~• ~~between air carriers and labor unions in~~ the ~~United~~inability ~~States~~to ~~are~~successfully ~~governed~~combine byour ~~the Railway~~businesses ~~Labor~~in ~~Act~~a ~~(“RLA”).~~manner ~~Under the RLA, collective bargaining agreements generally contain “amendable dates” rather than expiration dates, and the RLA requires~~ that apermits ~~carrier~~us ~~maintain~~to ~~the~~achieve ~~existing terms and conditions of employment following~~ the ~~amendable~~synergies ~~date through a multi-stage~~ and ~~usually~~other ~~lengthy~~benefits ~~series~~anticipated ofto ~~bargaining~~result ~~processes~~from ~~overseen by~~ the ~~National Mediation Board (“NMB”).~~ Merger;

If• ~~no agreement is reached during direct negotiations between~~ the ~~parties,~~challenge ~~either~~of ~~party~~integrating ~~may~~complex ~~request that the NMB appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation processes~~systems, ~~and~~operating ~~it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation~~procedures, ~~the~~regulatory ~~NMB~~compliance ~~in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit to arbitration~~programs, ~~and if arbitration is rejected by either party~~technology, aaircraft ~~30-day “cooling off” period commences. During or after that period~~fleets, ~~a Presidential Emergency Board (“PEB”) may be established~~networks, ~~which examines the parties’ positions~~ and ~~recommends~~other aassets ~~solution.~~in ~~The PEB process lasts for 30 days and is followed by another 30-day “cooling off” period. At the end of~~ a ~~“cooling~~manner ~~off”~~that ~~period,~~minimizes ~~unless~~any ~~an agreement~~adverse isimpact ~~reached~~on ~~or action is taken by Congress~~customers, ~~the labor organization may exercise “self-help”~~suppliers, ~~such as a strike~~employees, ~~which could materially adversely affect our ability to conduct our business~~ and ~~our~~other ~~financial performance.~~ constituencies;

We• ~~are currently in negotiations with~~ the ~~unions~~effects ~~representing~~of ~~our~~divestitures ~~fleet service employees, our passenger service employees, our mechanic, stock clerk~~ and ~~related~~other ~~employees,~~operational ~~our~~commitments maintenance training instructors, our flight crew training instructors and our flight simulator engineers. On February 8, 2013, the US Airways pilots represented by USAPA voted to ratify a memorandum of understanding (“MOU”) that will become effective in ~~the~~connection ~~event a merger~~ with ~~AMR is consummated. If~~ the ~~merger~~settlement ~~is completed, the MOU provides a six-year agreement for the pilots~~ of the ~~combined~~litigation ~~post-merger~~brought ~~carrier.~~by ~~In addition, our express subsidiary, Piedmont, is in negotiations with~~ the ~~unions~~DOJ ~~representing its flight attendants~~ and ~~its~~certain ~~mechanics.~~states ~~All~~prior ~~negotiations except those involving the Piedmont mechanics are being overseen by the NMB. None of these unions presently may lawfully engage in concerted refusals~~ to work, such as strikes, slow-downs, sick-outs or other similar activity, against us. Nonetheless, there is a risk that disgruntled employees, either with or without union involvement, could engage in one or more concerted refusals to work that could individually or collectively harm the ~~operation~~closing of ~~our airline and impair our financial performance. For example, on September 28, 2011,~~ the U.S. District Court in Charlotte granted a preliminary injunction, which was subsequently converted to a permanent injunction, enjoining the labor union representing our pilots from engaging in an illegal work slowdown. Merger;

~~The~~• ~~inability~~the tochallenge ~~maintain~~of ~~labor~~forming ~~costs~~and atmaintaining ~~competitive~~an ~~levels~~effective ~~would~~and ~~harm~~cohesive ~~our~~management ~~financial performance.~~ team;

~~Currently,~~• ~~our labor costs are very competitive relative to~~ the ~~other~~diversion ~~hub-and-spoke carriers. However, we cannot provide assurance that labor costs going forward will remain competitive because some~~ of ~~our~~ agreements are amendable now and others may become amendable, competitors may significantly reduce their labor costs or we may agree to higher-cost provisions in our current or future labor negotiations. Approximately 83% of the ~~employees~~attention ~~within US Airways Group are represented for collective bargaining purposes by labor unions. Some~~ of our ~~unions~~management ~~have brought~~ and ~~may~~other ~~continue~~key to bring grievances to binding arbitration, including related to wages. Unions may also bring court actions and may seek to compel us to engage in bargaining processes where we believe we have no such obligation. If successful, there is a risk these judicial or arbitral avenues could create material additional costs that we did not anticipate. employees;

22• the challenge of integrating workforces while maintaining focus on providing consistent, high quality customer service and running an efficient operation;

~~Table~~• ofthe ~~Contents~~risks relating to integrating various computer, communications and other technology systems, including designing and implementing an integrated customer reservations system, that will be necessary to operate American and US Airways as a single airline and to achieve cost synergies by eliminating redundancies in the businesses;

~~Interruptions~~• orthe ~~disruptions~~disruption ~~in service at one~~ of, ~~our hub airports~~ or ~~our~~the ~~focus~~loss ~~city could~~of ~~have~~momentum ain, ~~material adverse impact on~~ our ~~operations.~~ongoing business;

We• operate principally through hubs in Charlotte, Philadelphia and Phoenix, and our focus city, Washington, D.C. Substantially all of our flights either originate in or fly into one of these locations. A significant interruption or disruption in service at one of our hubs or in Washington, D.C. resulting from air traffic control delays, weather conditions, natural disasters, growth constraints, relations with third-party service providers, failure of computer systems, facility disruptions, labor relations, fuel supplies, terrorist activities or otherwise could result in the ~~cancellation~~branding or ~~delay~~rebranding ofinitiatives amay ~~significant~~involve ~~portion~~substantial ofcosts ~~our flights~~ and, asmay anot ~~result,~~be ~~could~~favorably ~~have~~received aby ~~severe~~customers; ~~impact on our business, operations~~ and ~~financial performance.~~

~~Regulatory~~• ~~changes~~the ~~affecting~~potential unknown liabilities, liabilities that are significantly larger than we currently anticipate and unforeseen increased expenses or delays associated with the ~~allocation~~Merger, ofincluding ~~slots~~costs ~~could~~in ~~have~~excess aof ~~material~~the ~~adverse~~cash ~~impact~~transition oncosts ~~our~~that ~~operations.~~we currently anticipate.

~~Operations~~We athave ~~four~~submitted ~~major~~to ~~domestic~~the ~~airports,~~FAA ~~certain~~a ~~smaller~~transition ~~domestic~~plan ~~airports~~for ~~and~~merging ~~certain~~the ~~foreign~~day-to-day ~~airports~~operations ~~served~~of byAmerican usand ~~are~~US ~~regulated~~Airways ~~by governmental~~under ~~entities~~a ~~through~~single operating ~~the~~certificate. ~~use~~The issuance of ~~“slots”~~a orsingle ~~similar~~operating ~~regulatory~~certificate ~~mechanisms~~will ~~which~~occur ~~limit~~when the ~~rights~~FAA ofagrees ~~carriers~~that towe ~~conduct~~have ~~operations~~achieved ata ~~those~~level ~~airports.~~of ~~Each~~integration ~~slot~~that ~~represents~~can ~~the~~be ~~authorization~~safely tomanaged ~~land~~under atone orcertificate. ~~take~~While ~~off from~~ the ~~particular airport~~parties ~~during~~currently abelieve ~~specified~~that ~~time~~such approval ~~period~~can ~~and~~be ~~may~~obtained ~~have~~within ~~other~~two ~~operational~~years ~~restrictions~~from asthe ~~well.~~closing Inof the ~~United States~~Merger, the ~~Federal~~actual ~~Aviation~~time ~~Administration~~required ~~(“FAA”) currently regulates the allocation of slot or slot exemptions at Washington National~~ and ~~three~~cost ~~New~~incurred ~~York~~to ~~City~~receive ~~airports:~~this ~~Newark,~~approval ~~JFK~~cannot ~~and~~be ~~LaGuardia~~predicted. ~~Our~~Any ~~operations~~delay atin ~~these airports generally require~~ the ~~allocation~~grant of ~~slots~~such approval or ~~similar~~increase ~~regulatory~~in ~~authority.~~costs ~~Similarly,~~beyond ~~our~~those ~~operations at international airports in Frankfurt,~~presently ~~London~~expected ~~Heathrow,~~could ~~Paris~~have ~~and~~a ~~other~~material ~~airports~~adverse ~~outside~~effect on the ~~United~~completion ~~States~~date ~~are~~of ~~regulated~~our byintegration ~~local~~plan ~~slot~~and ~~authorities~~receipt ~~pursuant~~of to the ~~International~~benefits ~~Air~~expected ~~Transport~~from ~~Association’s~~that ~~Worldwide Scheduling Guidelines and applicable local law~~plan.

WeSee ~~currently~~also ~~have~~“We ~~sufficient~~may ~~slots~~face orchallenges ~~similar~~in ~~authority~~integrating ~~to operate~~ our ~~existing flight schedule and have generally been able to acquire the necessary rights to expand flights and to change our schedules~~computer, ~~although~~communications ~~some airports are more challenging than others in terms of the cost~~ and ~~availability of additional authority necessary to expand operations. There is no assurance, however, that we will be able to do so in the future because, among~~ other ~~reasons,~~technology ~~such allocations are subject to changes in government policy. The FAA is planning a new rulemaking in 2013 to update the current rules governing the New York City airports. As~~systems” ~~the new proposal has not been released yet, we cannot state that the new proposed rules, if finalized, would not have a material impact on our operations~~below.

IfAccordingly, we ~~incur~~may ~~problems~~not ~~with~~be ~~any~~able ofto ~~our~~realize ~~third-party~~the ~~regional~~contemplated ~~operators~~benefits orof ~~third-party~~the ~~service~~Merger ~~providers~~fully, ~~our~~or ~~operations~~at ~~could~~all, beor ~~adversely~~it ~~affected~~may take bylonger aand ~~resulting~~cost ~~decline~~more into ~~revenue~~realize orsuch ~~negative~~benefits ~~public perception~~than ~~about our services~~expected.

A22 significant portion of our regional operations are conducted by third-party operators on our behalf, primarily under capacity purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risks of disruptions to their operations, which may result from many of the same risk factors disclosed in this report, such as the impact of adverse economic conditions, and other risk factors, such as a bankruptcy restructuring of any of the regional operators. We may also experience disruption to our regional operations if we terminate the capacity purchase agreement with one or more of our current operators and transition the services to another provider. As our regional segment provides revenues to us directly and indirectly (by providing flow traffic to our hubs), any significant disruption to our regional operations would have a material adverse effect on our business, results of operations and financial performance.

InTable addition, our reliance upon others to provide essential services on behalf of our operations may result in our relative inability to control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and services required for our operations, including express flight operations, aircraft maintenance, ground services and facilities, reservations and baggage handling. Similar agreements may be entered into in any new markets we decide to serve. These agreements are generally subject to termination after notice by the third-party service provider. We are also at risk should one of these service providers cease operations, and there is no guarantee that we could replace these providers on a timely basis with comparably priced providers. Recent volatility in fuel prices, disruptions to capital markets and the current economic downturn in general have subjected certain of these third-party service providers to strong financial pressures. Any material problems with the efficiency and timeliness of contract services, resulting from financial hardships or otherwise, could have a material adverse effect on our business, financial condition and results of operations. Contents

23Our indebtedness and other obligations are substantial and could adversely affect our business and liquidity.

~~Table~~We have significant amounts of ~~Contents~~indebtedness and other obligations, including pension obligations, obligations to make future payments on flight equipment and property leases, and substantial non-cancelable obligations under aircraft and related spare engine purchase agreements. Moreover, currently a substantial portion of our assets are pledged to secure our indebtedness. Our substantial indebtedness and other obligations could have important consequences. For example, they:

We• ~~rely~~limit onour ~~third~~ability ~~party~~to ~~distribution~~obtain ~~channels~~additional ~~and~~funding ~~must~~for ~~manage~~working ~~effectively~~capital, to withstand operating risks that are customary in the industry, capital expenditures, acquisitions, investments, integration costs, ~~rights~~ and ~~functionality~~general ofcorporate ~~these~~purposes, ~~channels.~~and adversely affect the terms on which such funding can be obtained;

We• ~~rely~~require onus third party distribution channels, including those provided by or through global distribution systems, or GDSs (e.g., Amadeus, Sabre and Travelport), conventional travel agents and online travel agents, or OTAs (e.g., Expedia, Orbitz and Travelocity), to ~~distribute~~dedicate a ~~significant~~substantial portion of our ~~airline~~cash ~~tickets and~~flow wefrom ~~expect~~operations ~~in the future~~ to ~~continue~~payments ~~to rely~~ on these channels and hope to expand their ability to distribute and collect revenues for ancillary products (e.g., fees for selective seating). These distribution channels are more expensive and at present have less functionality in respect of ancillary product offerings than those we operate ourselves, such as our ~~call~~indebtedness ~~centers~~ and ~~our~~other ~~website. Certain of these distribution channels also effectively restrict the manner in which we distribute our products generally. To remain competitive~~obligations, wethereby ~~will~~reducing ~~need to manage successfully our distribution costs and rights, increase our distribution flexibility and improve~~ the ~~functionality~~funds ofavailable ~~third~~for ~~party~~other distribution channels, while maintaining an industry-competitive cost structure. Any inability to manage our third party distribution costs, rights and functionality at a competitive level or any material diminishment or disruption in the distribution of our tickets could have a material adverse effect on our competitive position and our results of operations. purposes;

~~Further,~~• onmake April 21, 2011, we filed an antitrust lawsuit against Sabre in Federal District Court for the Southern District of New York. The lawsuit, as amended to date, alleges, among other things, that Sabre has engaged in anticompetitive practices to preserve its monopoly power by restricting our ability to distribute our products to our customers. The lawsuit also alleges that these actions have prevented us ~~from~~more ~~employing~~vulnerable ~~new competing technologies and has allowed Sabre~~ to ~~continue~~economic todownturns ~~charge us supracompetitive fees. The lawsuit seeks both injunctive relief~~ and ~~money~~catastrophic ~~damages.~~external Sabre filed a motion to dismiss the case, which the court denied in part and granted in part in September 2011, allowing two of the four counts in the complaint to proceed. On January 18, 2013, Sabre filed a motion for leave to file a counterclaim, alleging that US Airways and other airlines conspired among themselves and with a third-party technology firm to boycott Sabre and other global distribution systems. If permitted to proceed, Sabre would be seeking monetary damages and injunctive relief. We intend to pursue our claims against Sabre vigorously and to vigorously defend any claims Sabre is permitted to file against us, but there can be no assurance of the outcome of this litigation. events;

~~Changes~~• incontain ~~government~~restrictive ~~regulation~~covenants ~~could~~that ~~increase our operating costs and limit our ability to conduct our business.~~ could:

~~Airlines~~• ~~are~~limit ~~subject~~our ability to ~~extensive~~merge, ~~regulatory~~consolidate, ~~requirements.~~sell ~~In the last several years~~assets, ~~Congress has~~incur ~~passed~~additional ~~laws~~indebtedness, ~~and~~issue ~~the~~preferred ~~U.S. Department of Transportation (“DOT”)~~stock, ~~the~~make ~~FAA,~~investments ~~the Transportation Security Administration (“TSA”)~~ and ~~the~~pay ~~Department~~dividends; ~~of Homeland Security have issued a number of directives~~ and ~~other regulations. These requirements impose substantial costs on airlines.~~

~~The~~• ~~FAA~~significantly ~~from~~constrain ~~time~~our toability ~~time issues directives and other regulations relating~~ to ~~the~~respond, ~~maintenance and operation of aircraft that require significant expenditures~~ or ~~operational~~respond ~~restrictions. Some FAA requirements cover~~quickly, ~~among~~to ~~other~~unexpected ~~things,~~disruptions ~~retirement~~in ~~and~~our ~~maintenance~~own ~~of older aircraft~~operations, ~~security~~the ~~measures,~~U.S. ~~collision avoidance~~or ~~systems,~~global ~~airborne windshear avoidance systems~~economies, ~~noise~~or ~~abatement,~~the ~~other~~businesses ~~environmental~~in ~~concerns,~~which ~~fuel~~we ~~tank inerting~~operate, ~~crew~~or ~~scheduling, aircraft operation and safety and increased inspections and maintenance procedures~~ to betake ~~conducted~~advantage onof ~~older aircraft.~~opportunities ~~Our~~that ~~failure~~would toimprove ~~timely~~our ~~comply with these requirements has in the past and could in the future result in fines and other enforcement actions by the FAA or other regulators. Additionally~~business, ~~the FAA recently finalized rules on pilot flight and duty times~~operations, ~~and~~or ~~has~~competitive ~~proposed~~position ~~new~~versus ~~rules~~other onairlines; ~~minimum requirements for all pilots operating commercial aircraft. Both rules could increase our costs~~ and ~~reduce staffing flexibility.~~

~~Our~~• ~~airline~~limit ~~subsidiaries~~our ~~are~~ability ~~obligated~~ to ~~collect~~withstand acompetitive ~~federal~~pressures ~~excise tax, commonly referred to as the “ticket tax,” on domestic~~ and ~~international~~reduce air transportation. Our airline subsidiaries collect the ticket tax, along with certain other U.S. and foreign taxes and user fees on air transportation, and pass along the collected amounts to the appropriate governmental agencies. Although these taxes are not our ~~operating~~flexibility ~~expenses, they represent an additional cost to our customers. There are a number of efforts~~ in ~~Congress~~responding ~~and in other countries~~ to ~~raise~~changing ~~different~~business ~~portions of the various taxes imposed on airlines~~ and ~~their~~economic ~~passengers~~conditions.

~~Most~~We ~~major~~will ~~U.S. airports~~need ~~impose a passenger facility charge (“PFC”). The ability of airlines~~ to ~~contest~~obtain ~~increases~~sufficient infinancing ~~this~~or ~~charge~~other iscapital ~~restricted by federal legislation, DOT regulations and judicial decisions. With certain exceptions, air carriers pass these charges on~~ to ~~passengers.~~operate ~~However, our ability to pass through PFCs to our customers is subject to various factors, including market conditions and competitive factors~~successfully. ~~The current cap on the PFC is $4.50 per passenger, but the industry faces regular efforts in Congress to raise the cap to a higher level.~~

~~DOT~~Our ~~consumer~~business ~~rules~~plan ~~that~~contemplates ~~took~~significant ~~effect~~investments onin ~~April 29,~~modernizing ~~2010~~our ~~require~~fleet ~~procedures~~and ~~for~~integrating ~~customer~~the ~~handling~~American ~~during~~and US ~~long~~Airways ~~onboard~~businesses. ~~delays~~Significant capital resources will be required to execute this plan, asand, ~~well~~ as ~~additional~~a ~~reporting~~result, ~~requirements~~we ~~for~~estimate ~~airlines~~ that, ~~have~~based ~~increased~~on ~~the~~our ~~cost~~commitments as of ~~airline~~December 31, ~~operations~~2013, ~~and~~our ~~reduced~~planned ~~revenues.~~aggregate ~~The~~expenditures ~~DOT~~for ~~has~~aircraft ~~been~~purchase commitments ~~aggressively~~and ~~investigating~~certain ~~alleged~~engines ~~violations~~for ofcalendar ~~these~~years ~~rules.~~2014-2018 Inwould ~~addition,~~be ~~the~~approximately ~~DOT~~$3.3 ~~finalized~~billion. aWe ~~second~~also ~~set~~currently ~~of rules~~anticipate ~~that~~cash ~~further~~transition ~~regulate~~costs ~~airline~~to ~~interactions~~integrate ~~with~~our ~~passengers~~businesses ~~through~~following the ~~reservations~~Merger ~~process,~~to atbe ~~the~~approximately ~~airport~~$1.2 billion, and onthese ~~board~~costs could ~~the~~exceed ~~aircraft~~our expectations. USAccordingly, ~~Airways~~we iswill inneed ~~compliance~~substantial ~~with~~financing ~~these~~or ~~rules,~~other ~~which~~capital ~~took~~resources. ~~effect~~Depending inon ~~August~~numerous ~~2011~~factors, ~~and~~many ~~others~~of which ~~took~~are ~~effect in~~out ~~January~~of ~~2012.~~our ~~These~~control, ~~rules~~such ~~require~~as ~~airlines~~the tostate ~~display~~of ~~all~~the ~~fares~~domestic inand anglobal ~~“all~~economies, ~~in”~~the ~~basis,~~capital ~~with~~and credit ~~the~~markets’ ~~price~~view of our prospects and the ~~air~~airline ~~travel~~industry in general, and ~~all~~the ~~taxes~~general availability of debt and ~~government~~equity ~~imposed~~capital ~~fees~~at ~~rolled~~the ~~into~~time we seek capital, the ~~displayed~~financing ~~fare.~~or ~~Enhanced~~other ~~disclosure~~capital ofresources ~~ancillary~~that ~~fees~~we ~~such~~will need may not be available to asus, ~~baggage~~or ~~fees~~may isonly ~~also~~be ~~required~~available on onerous terms and conditions. ~~Other~~There ~~rules~~can ~~apply~~be tono ~~post-ticket~~assurance ~~purchase~~that ~~price~~we ~~increases~~will ~~and~~be ansuccessful ~~expansion~~in obtaining financing or other needed sources of ~~tarmac~~capital ~~delay~~to ~~regulations~~operate successfully. An inability to ~~international~~obtain ~~carriers~~necessary financing on acceptable terms would have a material adverse impact on our business, results of operations and financial condition.

24Increased costs of financing, a reduction in the availability of financing and fluctuations in interest rates could adversely affect our liquidity, results of operations and financial condition.

~~Table~~Concerns about the systemic impact of ~~Contents~~inflation, the availability and cost of credit, energy costs and geopolitical issues, combined with continued changes in business activity levels and consumer confidence, increased unemployment and volatile oil prices, have contributed to unprecedented levels of volatility in the capital and credit markets. As a result of these market conditions, the cost and availability of credit have in the recent past been and may in the future be adversely affected by illiquid credit markets and wider credit spreads. These changes in the domestic and global financial markets may increase our costs of financing and adversely affect our ability to obtain financing needed for the acquisition of aircraft that we have contractual commitments to purchase and for other types of financings we may seek in order to refinance debt maturities, raise capital or fund other types of obligations. Any downgrades to our credit rating may likewise increase the cost and reduce the availability of financing.

WeFurther, ~~anticipate~~ a ~~third~~substantial ~~set~~portion of ~~consumer~~our ~~rules~~indebtedness bears interest at fluctuating interest rates, primarily based on the London interbank offered rate for deposits of U.S. dollars (“LIBOR”). LIBOR tends to befluctuate ~~issued~~based on general economic conditions, general interest rates, rates set by the ~~DOT~~Federal Reserve and other central banks, and the supply of and demand for credit in ~~mid-2013~~the London interbank market. We ~~continue~~ have not hedged our interest rate exposure with respect to ~~see~~the ~~other~~$1.6 ~~efforts~~billion term loan facility provided for by the ~~DOT~~loan toagreement, ~~further~~as ~~regulate~~amended, ~~airlines~~entered ~~through~~into ~~increased~~May 23, ~~data~~2013 among ~~reporting~~US ~~requirements~~Airways, ~~expansion~~certain affiliates of US Airways and certain lenders (the ~~Air~~“2013 ~~Carrier~~Citicorp ~~Access~~credit ~~Act~~facility”), American’s Credit and ~~greater~~Guaranty ~~oversight~~Agreement ofand ~~the~~other ~~ways~~of ~~that~~our ~~airlines~~floating ~~describe~~rate debt, and, ~~sell~~accordingly, ~~air~~our ~~transportation~~interest ~~and~~expense ~~other~~for any ~~products~~particular period may fluctuate based on LIBOR and ~~services~~other variable interest rates. ~~Each~~To ~~additional~~the ~~regulation~~extent orthese ~~other~~interest ~~form~~rates ofincrease, ~~regulatory~~our ~~oversight~~interest ~~increases~~expense ~~costs~~will ~~and~~increase, ~~adds~~in ~~greater~~which ~~complexity~~event towe may have difficulties making interest payments and funding our ~~operation.~~other fixed Wecosts, ~~cannot~~and ~~assure~~our ~~you~~available ~~that~~cash ~~compliance~~flow ~~with~~for ~~these~~general ~~new~~corporate ~~rules,~~requirements ~~anticipated~~may ~~rules~~be oradversely ~~other~~affected. ~~forms~~See also the discussion of ~~regulatory~~ ~~oversight~~interest ~~will~~rate ~~not~~risk ~~have~~in aPart ~~material~~II, ~~adverse~~Item 7A, ~~effect~~“Quantitative onand ~~our~~Qualitative ~~business~~Disclosures About Market Risk.”

On23 February 6, 2012, Congress passed the FAA Reauthorization legislation, formally titled as “FAA Modernization and Reform Act of 2012” (H.R.658). From the perspective of the airline industry, highlights include:

•Table Noof increase in airline ticket or fuel taxes;Contents

•Our Nohigh ~~increase~~level of fixed obligations may limit our ability to fund general corporate requirements and obtain additional financing, may limit our flexibility in ~~PFCs;~~responding to competitive developments and causes our business to be vulnerable to adverse economic and industry conditions.

•We Nohave ~~taxation~~a significant amount of ~~ancillary~~fixed ~~fees~~obligations, including debt, pension costs, aircraft leases and ~~revenue;~~financings, aircraft purchase commitments, leases and developments of airport and other facilities and other cash obligations. We also have certain guaranteed costs associated with our regional operations.

•As ~~Authorized~~a ~~eight~~result additional daily flights beyond the 1,250 mile perimeter restricting flights to and from Washington National. Four flights were allocated to new entrant and limited incumbents, and four were set aside for incumbent carriers as of the ~~date~~substantial offixed ~~enactment~~costs ~~(that~~associated ~~is,~~with ~~one~~these ~~for~~obligations: ~~each of American, Delta, United and US Airways);~~

• ~~Dedicated~~a ~~title~~decrease ofin ~~the~~revenues ~~legislation~~results isin ~~intended to help accelerate implementation of the NextGeneration air traffic control system. Among the provisions included were mandated performance metrics, as well as~~ a ~~requirement~~disproportionately ~~that~~greater ~~modernization~~percentage ~~projects~~decrease atin ~~35 major airports are to receive streamlined environmental review~~earnings; ~~and~~

• ~~Sunset~~we ~~line~~may ~~checks~~not ~~for~~have ~~pilots~~sufficient ~~over~~liquidity ~~60.~~to fund all of these fixed obligations if our revenues decline or costs increase; and

In• ~~addition,~~we ~~the~~may ~~TSA~~have ~~mandates~~to ~~the~~use ~~federalization~~our ofworking ~~certain~~capital ~~airport~~to ~~security~~fund ~~procedures~~these ~~and~~fixed ~~imposes~~obligations ~~additional~~instead ~~security requirements on airports and airlines, most~~ of ~~which~~funding ~~are~~general ~~funded~~corporate by a per-ticket tax on passengers and a tax on airlines. The federal government has on several occasions proposed a significant increase in the per-ticket tax. We anticipate additional proposals to raise the ticket tax could happen in future budget and revenue raising proposals in Congress. A ticket tax increaserequirements, ifincluding ~~implemented,~~capital ~~could negatively impact our financial results~~expenditures.

~~Finally,~~These ~~the ability~~obligations ofalso ~~U.S.~~impact carriers to operate international routes is subject to change because the applicable arrangements between the U.S. and foreign governments may be amended from time to time, or because appropriate slots or facilities may not be available. We cannot assure you that laws or regulations enacted in the future will not adversely affect our operating costs. In addition, increased environmental regulation, particularly in the European Union (“EU”), may increase costs or restrict our operations. The EU’s Emissions Trading Scheme (“ETS”) was scheduled to take full effect in 2012. This scheme has the ability to ~~appreciably~~obtain ~~raise~~additional costs associated with flights to and from EU countries as airlines will have to purchase emissions credits on the open market to cover some percentage of a carrier’s European operations. US Airways has met all the regulatory milestones associated with the program to date. While we are complying with the regulations under protestfinancing, weif ~~have also been supportive of the efforts of the U.S. government and other countries to delay the implementation and financial effects of the new regulations. In November 2012~~needed, ~~the EU announced plans to suspend payments~~ and ~~other~~ ~~aspects~~our offlexibility ~~the ETS through October 2013 for flights between the EU and countries outside the EU. US Airways does not anticipate any significant emissions credit expenditures~~ in ~~2013. In addition, President Obama recently signed legislation that will allow~~ the ~~Secretary~~conduct of ~~Transportation~~our tobusiness, ~~prohibit U.S. airlines from participating in the ETS. Whether US Airways will ever be required to purchase~~ and ~~redeem~~could ~~emissions~~materially ~~credits~~adversely ~~under~~affect ~~the~~our ~~EU scheme is still unknown. However~~liquidity, itresults ~~is increasingly likely that in the future we will be subject to some form~~ of ~~regulation~~operations ~~governing aircraft emissions. How such regulations are implemented or what the impact on us will be is unknown at this time. See “We are subject to many forms of environmental regulation~~ and ~~may~~financial ~~incur substantial costs as a result” below~~condition.

25Any failure to comply with the covenants contained in our financing arrangements may have a material adverse effect on our business, results of operations and financial condition.

~~Table~~The terms of ~~Contents~~our 2013 Citicorp credit facility and American’s Credit and Guaranty Agreement require us to ensure that AAG and its restricted subsidiaries maintain consolidated unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities in an aggregate amount not less than $2.0 billion, and the 2013 Citicorp credit facility also requires us and the other obligors thereunder to hold not less than $750 million (subject to partial reductions upon certain reductions in the outstanding amount of the loan) of that amount in accounts subject to control agreements.

~~Changes~~Our ability to comply with these liquidity covenants while paying the fixed costs associated with our ~~business~~contractual ~~model~~obligations ~~that~~and ~~are~~our ~~designed~~other toexpenses, ~~increase~~including ~~revenues~~significant ~~may~~pension ~~not~~and beother post-employment funding obligations and cash transition costs associated with the Merger, will depend ~~successful~~on our operating performance and ~~may~~cash ~~cause~~flow, ~~operational~~which ~~difficulties~~are orseasonal, ~~decreased~~as ~~demand~~well as factors including fuel costs and general economic and political conditions.

WeIn ~~have~~addition, ~~implemented~~our ~~several~~credit ~~new~~facilities ~~measures designed to increase revenue~~ and ~~offset~~certain ~~costs.~~other ~~These~~financing ~~measures~~arrangements include ~~charging~~covenants ~~separately for services~~ that, ~~had~~among ~~previously~~other ~~been~~things, ~~included~~limit our ~~within~~ability ~~the~~to ~~price~~pay ofdividends ~~a ticket~~ and ~~increasing~~make certain other ~~pre-existing~~payments, ~~fees.~~make Wecertain ~~may~~investments, ~~introduce~~incur additional ~~initiatives in the future; however~~indebtedness, asenter ~~time~~into ~~goes~~certain ~~on,~~affiliate wetransactions ~~expect that it will be more difficult to identify~~ and ~~implement~~engage ~~additional initiatives. We cannot assure you that these new measures or any future initiatives will be successful~~ in ~~increasing~~certain ~~our~~business ~~revenues. Additionally~~activities, the implementation of these initiatives creates logistical challenges that could harm the operational performance of our airline. Also, the new and increased fees might reduce the demand for air travel on our airline or across the industry in ~~general,~~each ~~particularly~~case ifsubject ~~weakened economic conditions continue~~ to ~~make~~certain ~~our customers more sensitive to increased travel costs or provide a significant competitive advantage to other carriers that determine not to institute similar charges~~exceptions.

The ~~loss~~factors ofaffecting ~~key~~our ~~personnel~~liquidity ~~upon~~(and ~~whom~~our weability ~~depend~~to comply with related liquidity and other covenants) will remain subject to ~~operate~~significant fluctuations and uncertainties, many of which are outside our ~~business~~control. orAny ~~the~~breach ~~inability~~of our liquidity and other covenants or failure to ~~attract~~timely ~~additional qualified~~pay ~~personnel~~our obligations could ~~adversely~~result ~~affect~~in a variety of adverse consequences, including the acceleration ~~results~~of our indebtedness, the withholding of credit card proceeds by our ~~operations~~credit card processors and the exercise of remedies by our creditors and lessors. In such a situation, we may not be able to fulfill our contractual obligations, repay the accelerated indebtedness, make required lease payments or otherwise cover our ~~financial~~fixed ~~performance~~costs.

WeIf ~~believe that~~ our ~~future~~financial condition ~~success~~worsens, ~~will~~provisions ~~depend~~ in ~~large part on~~ our ~~ability~~credit tocard ~~attract~~processing and ~~retain highly qualified management, technical and~~ other ~~personnel.~~commercial Weagreements may not be successful in retaining key personnel or in attracting and retaining other highly qualified personnel. Any inability to retain or attract significant numbers of qualified management and other personnel could adversely affect our ~~business~~liquidity.

We ~~may~~have beagreements ~~adversely~~with ~~affected~~companies bythat ~~conflicts~~process ~~overseas~~customer orcredit ~~terrorist~~card ~~attacks;~~transactions for the sale of air travel ~~industry~~and ~~continues~~other services. These agreements allow these processing companies, under certain conditions (including, with respect to ~~face~~certain ~~ongoing~~agreements, ~~security~~the ~~concerns~~failure to maintain certain levels of liquidity) to hold an amount of our cash (a “holdback”) equal to some or all of the advance ticket sales that have been processed by that company, but for which we have not yet provided the air transportation. We are not currently required to maintain any holdbacks pursuant to these requirements. These holdback requirements can be modified at the discretion of the processing companies upon the occurrence of specific events, including material adverse changes in our financial condition. An increase in the current holdback balances to higher percentages up to and including 100% of relevant advanced ticket sales could materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow other entities to impose less favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our financial condition.

~~Acts~~24 of terrorism or fear of such attacks, including elevated national threat warnings, wars or other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs. The attacks of September 11, 2001 and continuing terrorist threats and attempted attacks materially impacted and continue to impact air travel. Increased security procedures introduced at airports since the attacks and other such measures as may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved flight deck security, deployment of federal air marshals on board flights, improved airport perimeter access security, airline crew security training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of security screening personnel, additional provision of passenger data to U.S. Customs and enhanced background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue.

OurTable ability to operate and grow our route network in the future is dependent on the availability of adequate facilities and infrastructure throughout our system. Contents

In order to operate our existing flight schedule and, where appropriate, add service along new or existing routes, we must be able to obtain adequate gates, ticketing facilities, operations areas, slots (where applicable) and office space. The ~~nation’s~~historical ~~aging~~consolidated ~~air~~financial ~~traffic~~information ~~control~~contained ~~infrastructure presents challenges as well. The ability of the air traffic control system to handle traffic~~ in ~~high-density~~this ~~areas where we have a large concentration of flights~~ report is ~~critical~~not todirectly ~~our~~comparable ~~ability~~ to ~~operate~~ our ~~existing~~financial ~~schedule.~~information ~~Also, as airports around the world become more congested, we cannot always be sure that our plans~~ for ~~new service~~prior ~~can~~or befuture ~~implemented in a commercially viable manner given operating constraints at airports throughout our network~~periods.

WeA ~~are~~number ~~subject~~of tofactors ~~many~~render our ~~forms~~historical ofconsolidated ~~environmental~~financial ~~regulation~~information ~~and~~not ~~may~~directly ~~incur~~comparable ~~substantial~~to ~~costs~~our asfinancial ainformation ~~result.~~for prior or future periods, including:

We• ~~are~~the ~~subject~~Merger towas ~~increasingly~~accounted ~~stringent~~for ~~federal,~~using ~~state,~~the ~~local~~acquisition ~~and~~method ~~foreign~~of ~~laws,~~accounting ~~regulations~~with ~~and~~AAG ~~ordinances~~as ~~relating to~~ the ~~protection~~acquiring ~~of the environment~~entity, ~~including~~resulting ~~those~~in ~~relating~~an toadjustment ~~emissions~~ to the ~~air,~~carrying ~~discharges~~values toof ~~surface~~the ~~and~~assets ~~subsurface waters, safe drinking water,~~ and ~~the~~liabilities ~~management~~ of ~~hazardous~~US ~~substances,~~Airways ~~oils~~Group ~~and~~compared ~~waste~~to ~~materials.~~its ~~Compliance~~historical ~~with~~carrying ~~all~~values; ~~environmental laws~~ and ~~regulations can require significant expenditures.~~

26• certain prior accounting presentations, including the manner in which we report our regional operations, have been changed and historical results restated to conform to the current presentation.

~~Table~~Due to these and other factors largely related to the Merger and the Plan, investors are cautioned as to the limitations of ~~Contents~~our historical financial statements and urged to review carefully Part II – Item – 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~The~~Union U.S. Environmental Protection Agency (“EPA”) has proposed effluent limitation guidelines for airport de-icing fluid. This proposed technology-based rule would require the mitigation of spent de-icing fluid (glycol) discharges through collection and treatment. Airports meeting threshold requirements would have to construct or reconfigure de-icing facilities to capture and treat the fluid. Additionallydisputes, ~~the~~employee ~~EPA~~strikes has proposed changes to underground storage tank regulations that could affect certain airport fuel hydrant systems. Airport systems that fall within threshold requirements would need to be modified to meet regulations. Neither rule has been finalized, and ~~cost estimates have not been defined, but US Airways along with~~ other airlines would share a portion of these costs at applicable airports. In addition to the proposed EPA regulations, several U.S. airport authorities are actively engaged in efforts to limit discharges of delabor-~~icing~~related ~~fluid~~disruptions tomay local groundwater, often by requiring airlines to participate in the building or reconfiguring of airport de-icing facilities. Such efforts are likely to impose additional costs and restrictions on airlines using those airports. We do not believe, however, that such environmental developments will have a material impact on our capital expenditures or otherwise adversely affect our operations~~, operating costs or competitive position~~.

WeRelations ~~are~~between ~~also~~air ~~subject~~carriers ~~to other environmental laws~~ and ~~regulations,~~labor ~~including~~unions ~~those~~in ~~that~~the ~~require~~U.S. usare togoverned ~~remediate~~by ~~soil~~the ~~or groundwater to meet certain objectives~~RLA. Under ~~federal~~the ~~law~~RLA, CBAs ~~generators~~generally ofcontain ~~waste~~“amendable ~~materials,~~dates” ~~and~~rather ~~owners~~than orexpiration ~~operators of facilities~~dates, ~~can be subject to liability for investigation~~ and ~~remediation~~the ~~costs~~RLA atrequires ~~locations~~ that ~~have~~a ~~been~~carrier ~~identified~~maintain asthe ~~requiring~~existing ~~response~~terms ~~actions. Liability under these laws is often strict, joint~~ and ~~several,~~conditions ~~meaning~~of ~~that~~employment wefollowing ~~could~~the beamendable ~~liable~~date ~~for~~through ~~the~~a ~~costs~~multi-stage ofand ~~cleaning~~usually ~~up environmental~~lengthy ~~contamination~~series ~~regardless~~ of ~~fault~~bargaining orprocesses ~~the~~overseen ~~amount~~by ~~of wastes directly attributable to us. We have liability for such costs at various sites, although~~ the ~~future costs associated with the remediation efforts are currently not expected to have a material adverse effect on our business~~NMB.

WeIf ~~have~~no ~~various~~agreement ~~leases~~is ~~and~~reached ~~agreements~~during ~~with~~direct ~~respect~~negotiations tobetween ~~real property~~the parties, ~~tanks~~either ~~and~~party ~~pipelines~~may ~~with airports~~request ~~and~~that ~~other~~the ~~operators~~NMB appoint a federal mediator. ~~Under~~The ~~these~~RLA ~~leases~~prescribes no timetable for the direct negotiation and ~~agreements~~mediation processes, weand ~~have~~it ~~agreed~~is not unusual for those processes to ~~indemnify~~last ~~the~~for ~~lessor~~many months or ~~operator~~even ~~against~~several ~~environmental~~years. If ~~liabilities~~no ~~associated~~agreement ~~with~~is reached in mediation, the ~~real~~NMB ~~property~~in orits ~~operations~~discretion ~~described~~may ~~under~~declare that an impasse exists and proffer binding arbitration to the ~~agreement~~parties. Either party may decline to submit to arbitration, ~~even~~and if wearbitration ~~are~~is ~~not the~~rejected by either party, a ~~responsible~~30-day ~~for~~“cooling ~~the~~off” ~~initial~~period ~~event~~commences. During or after that ~~caused~~period, a PEB may be established, which examines the ~~environmental~~parties’ ~~damage.~~positions Weand ~~also~~recommends ~~participate~~a insolution. ~~leases~~The ~~with~~PEB ~~other~~process ~~airlines~~lasts infor ~~fuel~~30 ~~consortiums~~days and ~~fuel~~is ~~committees~~followed atby ~~airports~~another 30-day “cooling off” period. At the end of a “cooling off” period, ~~where~~unless ~~such~~an ~~indemnities~~agreement ~~are~~is ~~generally~~reached ~~joint~~or ~~and~~action ~~several~~is ~~among~~taken by Congress, the labor organization may exercise “self-help,” such as a strike, which could materially ~~participating~~adversely ~~airlines~~affect our business, results of operations and financial condition.

~~There~~We ~~is increasing global regulatory focus on climate change and greenhouse gas emissions. For example, the EU has established the ETS, the mechanism by which emissions of CO2~~ are currently ~~regulated~~ in ~~the~~negotiations ~~EU.~~with ~~Since~~ the ~~beginning of 2012, the ETS has required airlines to have emission allowances equal to the amount of carbon dioxide~~ ~~emissions~~IAM ~~from~~with ~~flights~~respect to ~~and~~US ~~from~~Airways ~~EU member states. In November 2012~~mechanics, ~~the~~stock EUclerks ~~announced an intent to suspend payments~~ and ~~other~~related ~~aspects~~employees, ~~of the ETS through October 2013 for flights between the EU~~ and ~~countries~~fleet ~~outside~~service ~~the EU. In addition~~employees, ~~President Obama~~and ~~recently signed legislation that will allow~~ the ~~Secretary~~AFA ofwith ~~Transportation~~respect to ~~prohibit~~Piedmont ~~U.S.~~flight ~~airlines from participating in the ETS~~attendants. ~~Although~~None ~~the details~~ of ~~the~~these ~~suspension~~unions ~~and~~presently ~~prohibition~~may ~~have~~lawfully ~~not~~engage ~~yet been finalized, US Airways does not anticipate any significant emissions credit expenditures~~ in ~~2013.~~concerted ~~Beyond~~refusals ~~2013,~~to ~~compliance with the EU ETS could significantly increase our operating costs. However~~work, ~~whether US Airways will ever be required to purchase and redeem emissions credits~~such ~~under~~as ~~the~~strikes, ~~EU scheme is still unknown. Further~~slow-downs, ~~the~~sick-outs ~~potential~~or ~~impact~~other ofsimilar ~~ETS on costs will ultimately depend on a number of factors~~activity, ~~including~~against ~~baseline emissions, the price of emission credits and the number of future flights subject to ETS~~us. ~~These costs have not been completely defined and will fluctuate. In the U.S.~~Nonetheless, there is ana ~~increasing~~risk trend toward regulating greenhouse gas emissions directly under the Clean Air Act, and while the EPA’s recent regulatory activity in this area has focused on industries other than aviation, it is possible that ~~future~~disgruntled ~~EPA regulations or new legislation could impact airlines. Several states are also considering initiatives to regulate emissions of greenhouse gases~~employees, ~~primarily~~either ~~through~~with ~~the planned development of greenhouse gas emissions inventories and/~~or ~~regional~~without ~~greenhouse~~union ~~gas cap and trade programs. These regulatory efforts~~involvement, ~~both~~could ~~internationally~~engage ~~and~~ in ~~the~~one ~~U.S.~~or atmore ~~the~~concerted ~~federal~~refusals ~~and~~to ~~state~~work ~~levels,~~that ~~are still developing and we cannot yet~~could ~~determine~~individually ~~what the final regulatory programs will be in the U.S., the EU~~ or incollectively ~~other~~harm ~~areas in which we do business. However, such climate change-related regulatory activity in~~ the ~~future~~operation ~~may~~of ~~adversely affect~~ our ~~business~~airline and ~~financial~~impair ~~results by requiring us to reduce~~ our ~~emissions,~~financial ~~purchase allowances or otherwise pay for our emissions~~performance. ~~Such activity may also impact us indirectly by increasing our operating costs, including fuel costs.~~

~~Governmental~~See ~~authorities~~Part ~~in several U.S. and foreign cities are also considering or have already implemented aircraft noise~~I, ~~reduction programs~~Item 1, ~~including~~Business ~~the~~— ~~imposition~~“Employees ~~of nighttime curfews~~ and ~~limitations~~Labor ~~on daytime take-offs and landings~~Relations.” ~~We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely affected if locally-imposed regulations become more restrictive or widespread.~~

27The inability to maintain labor costs at competitive levels would harm our financial performance.

~~Table~~Currently, we believe our labor costs are competitive relative to the other large network carriers. However, we cannot provide assurance that labor costs going forward will remain competitive because some of ~~Contents~~our agreements are amendable now and others may become amendable, competitors may significantly reduce their labor costs or we may agree to higher-cost provisions in our current or future labor negotiations. As of December 31, 2013, approximately 84% of our employees were represented for collective bargaining purposes by labor unions. Some of our unions have brought and may continue to bring grievances to binding arbitration, including related to wages. Unions may also bring court actions and may seek to compel us to engage in bargaining processes where we believe we have no such obligation. If successful, there is a risk these judicial or arbitral avenues could create material additional costs that we did not anticipate.

WeInterruptions ~~rely~~or ~~heavily~~disruptions onin ~~technology~~service ~~and~~at ~~automated~~one ~~systems~~of ~~to operate~~ our ~~business,~~hub ~~and~~airports ~~any failure of these technologies or systems~~ could ~~harm~~have ~~our~~a ~~business,~~material ~~financial~~adverse ~~condition~~impact oron ~~results of~~ our operations.

We ~~are~~ ~~highly dependent on technology and automated systems to~~ operate ~~and~~principally ~~achieve~~through ~~low~~hubs ~~operating~~in ~~costs.~~Charlotte, ~~These~~Chicago, ~~technologies~~Dallas/Fort ~~and systems include our computerized airline reservation system~~Worth, ~~flight~~Los ~~operations system~~Angeles, ~~financial planning~~Miami, ~~management and~~New ~~accounting~~York ~~systems~~City, ~~telecommunications systems~~Philadelphia, ~~website,~~Phoenix ~~maintenance systems~~ and ~~check-in kiosks. In order for our operations to work efficiently~~Washington, ~~our website and reservation system must be able to accommodate a high volume of traffic, maintain secure information and deliver flight information~~D.C. Substantially all of our ~~tickets~~flights ~~are~~either ~~issued~~originate toin ~~passengers~~or asfly ~~electronic~~into ~~tickets.~~one Weof ~~depend on our reservation system, which is hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept~~ these ~~electronic tickets~~locations. IfA ~~our~~significant ~~automated~~interruption ~~systems are not functioning~~ or ifdisruption ~~our~~in ~~third-party~~ service ~~providers~~at ~~were to fail to adequately provide technical support, system maintenance or timely software upgrades for any~~ one of our ~~key~~hubs ~~existing~~resulting ~~systems,~~from weATC ~~could experience service disruptions or~~ delays, ~~which~~weather conditions, ~~could~~natural ~~harm~~disasters, ~~our~~growth ~~business~~constraints, ~~and~~relations ~~result~~with inthird-party ~~the~~service ~~loss of important data~~providers, ~~increase~~failure ~~our expenses and decrease our revenues. In the event that one or more~~ of ~~our~~computer ~~primary technology or~~ systems ~~vendors goes into bankruptcy~~, ~~ceases~~facility ~~operations or fails to perform as promised~~disruptions, ~~replacement~~labor ~~services may not be readily available on a timely basis~~relations, atpower ~~competitive rates or at all~~supplies, ~~and~~fuel ~~any transition time to a new system may be significant. Our automated systems cannot be completely protected against other events that are beyond our control~~supplies, ~~including~~terrorist ~~natural~~activities ~~disasters, computer viruses~~ or ~~telecommunications~~otherwise ~~failures. Substantial or sustained system failures~~ could ~~cause service delays or failures and~~ result in ~~our customers purchasing tickets from other airlines. We cannot assure you that our security measures, change control procedures or disaster recovery plans are adequate to prevent~~the ~~disruptions~~cancellation or ~~delays.~~delay ~~Disruption~~of ~~in or changes to these systems could result in~~ a ~~disruption~~significant toportion of our ~~business~~flights and, ~~the~~as ~~loss~~a ofresult, ~~important data. Any of the foregoing~~ could ~~result~~have in a ~~material~~severe ~~adverse~~impact ~~effect~~ on our business, results of operations or and financial condition.

~~Ongoing~~25 ~~data security compliance requirements could increase our costs, and any significant data breach could harm our business, financial condition or results of operations.~~

OurTable business requires the appropriate and secure utilization of customer and other sensitive information. We cannot be certain that advances in criminal capabilities (including cyber attacks or cyber intrusions over the Internet, malware, computer viruses and the like), discovery of new vulnerabilities or attempts to exploit existing vulnerabilities in our systems, other data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology protecting the networks that access and store sensitive information. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Furthermore, there has been heightened legislative and regulatory focus on data security in the U.S. and abroad (particularly in the EU), including requirements for varying levels of customer notification in the event of a data breach. Contents

InIf ~~addition,~~we ~~many~~are ofunable ~~our commercial~~to ~~partners,~~obtain ~~including~~and ~~credit~~maintain ~~card~~adequate ~~companies,~~facilities ~~have~~and infrastructure ~~imposed~~throughout ~~data~~our ~~security~~system ~~standards~~and, ~~that~~at wesome ~~must~~airports, ~~meet.~~adequate ~~In particular~~slots, we ~~are~~may ~~required~~be byunable ~~the~~to ~~Payment~~operate ~~Card~~our ~~Industry~~existing ~~Security~~flight ~~Standards~~schedule ~~Council,~~and ~~founded by the credit card companies,~~ to ~~comply with~~expand ~~their~~or ~~highest~~change ~~level of data security standards. While we continue~~ our ~~efforts~~route tonetwork ~~meet~~in ~~these~~the ~~standards~~future, ~~new~~which ~~and revised standards~~ may behave ~~imposed~~a ~~that~~material ~~may~~adverse beimpact ~~difficult~~on ~~for us to meet and could increase~~ our ~~costs~~operations.

~~Failure~~In order to ~~comply~~operate ~~with~~our ~~the~~existing ~~Payment~~and ~~Card~~proposed ~~Industry~~flight ~~Standards~~schedule ~~discussed~~and, ~~above~~where orappropriate, ~~other~~add ~~privacy~~service ~~and~~along ~~data~~new ~~use~~or existing ~~and~~routes, ~~security~~we ~~requirements~~must ofbe ~~our partners~~able to maintain and/or ~~related~~obtain ~~laws~~adequate gates, ~~rules~~ticketing facilities, operations areas, and ~~regulations~~office tospace. ~~which~~As airports around the world become more congested, we ~~are~~will ~~subject~~not ~~may~~always ~~expose~~be usable to ~~claims~~ensure ~~for~~that ~~contract~~our ~~breach,~~plans ~~fines,~~for ~~sanctions~~new service orcan ~~other~~be ~~penalties,~~implemented ~~which~~in ~~could~~a ~~materially~~commercially ~~and~~viable ~~adversely~~manner, ~~affect~~given ~~our~~operating ~~results~~constraints ofat ~~operations~~airports ~~and~~throughout ~~overall~~our ~~business. In addition~~network, ~~failure~~including due to ~~address~~inadequate ~~appropriately~~facilities ~~these~~at ~~issues~~desirable ~~could~~airports. ~~also~~Further, ~~give~~our ~~rise~~operating tocosts ~~additional~~at ~~legal~~airports ~~risks,~~at which we operate, including inour ~~turn~~hubs, ~~could~~may increase ~~the~~significantly ~~size~~because ~~and~~of ~~number~~capital ofimprovements ~~litigation~~at ~~claims~~such ~~and~~airports ~~damages~~that ~~asserted~~we ormay ~~subject~~be usrequired to ~~enforcement~~fund, ~~actions~~directly or indirectly. In some circumstances, ~~fines~~such ~~and penalties~~costs ~~and~~could ~~cause~~be usimposed toby ~~incur~~the ~~further~~relevant ~~related~~airport ~~costs~~authority ~~and~~without ~~expenses~~our approval.

28In addition, operations at four major domestic airports, certain smaller domestic airports and certain foreign airports served by us are regulated by governmental entities through the use of slots or similar regulatory mechanisms which limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time period and may have other operational restrictions as well. In the U.S., the FAA currently regulates the allocation of slot or slot exemptions at Washington National and three New York City airports: Newark, JFK and LaGuardia. Our operations at these airports generally require the allocation of slots or similar regulatory authority. Similarly, our operations at international airports in Frankfurt, London Heathrow, Paris and other airports outside the U.S. are regulated by local slot authorities pursuant to the International Air Transport Association’s Worldwide Scheduling Guidelines and applicable local law. We cannot provide any assurance that regulatory changes regarding the allocation of slots or similar regulatory authority will not have a material adverse impact on our operations. For example, the FAA is planning a new rulemaking in 2014 to modify the current rules limiting flight operations at New York City’s JFK and LaGuardia airports.

~~Table~~In connection with the settlement of ~~Contents~~antitrust litigation brought by the DOJ and certain states, US Airways Group and AMR entered into settlement agreements that provide for certain asset divestitures. In the agreement with the United States government, among other things, US Airways and American agreed to divest and not reacquire for 10 years certain rights and assets consisting of 52 slot pairs at Washington National and 17 slot pairs at LaGuardia, in each case together with associated gates and related ground facilities necessary to operate those slot pairs, and two gates at each of Boston Logan International Airport, Chicago O’Hare International Airport, DAL, Los Angeles International Airport and Miami International Airport. The agreement with the plaintiff states requires our airlines, subject to certain conditions and exceptions, to maintain certain hub operations in a manner generally consistent with historical operations and to continue to provide scheduled daily service to certain specified communities, both for limited periods of time. In addition, US Airways and American entered into a related settlement with the DOT related to small community service from Washington National. Further, as a consequence of the Merger clearance process in the EU, US Airways and American are required to make available one pair of London Heathrow slots for use by another carrier between London and Philadelphia, which the acquiring carrier can deploy on another Heathrow city pair after operating the slots on London-Philadelphia for a period of not less than three consecutive years, and, along with our JBA partners, US Airways and American are required to make available for an initial period of up to seven years one pair of Heathrow slots for service between London and Miami that may be operated via an intermediate point.

WeAny ~~are~~limitation aton ~~risk~~our ofability ~~losses~~to ~~and~~acquire ~~adverse~~or ~~publicity~~maintain ~~stemming~~adequate ~~from~~gates, ~~any~~ticketing facilities, ~~accident~~operations ~~involving any~~areas, ofslots ~~our~~(where ~~aircraft~~applicable), or ~~the~~office ~~aircraft~~space ofcould have a material adverse effect on our ~~regional~~business, ~~operators~~results of operations and financial condition.

If ~~one~~we ofincur ~~our~~problems ~~aircraft,~~with anany ~~aircraft that is operated under our brand by one~~ of our third-party regional operators or anthird-party ~~aircraft~~service ~~that~~providers, ~~is operated by an airline that is one of~~ our ~~codeshare partners were to be involved in an accident, we~~ operations could be ~~exposed~~adversely toaffected significant tort liability. The insurance we carry to cover damages arising from any future accidents may be inadequate. In the event that our insurance is not adequate, we may be forced to bear substantial losses from an accident. In addition, any accident involving an aircraft that we operate, an aircraft that is operated under our brand by ~~one~~a ofresulting ~~our~~decline ~~regional~~in ~~operators~~revenue or annegative ~~aircraft that is operated by an airline that is one of our codeshare partners could create a~~ public perception ~~that~~about our aircraft or those of our regional operators or codeshare partners are not safe or reliable, which could harm our reputation, result in air travelers being reluctant to fly on our aircraft or those of our regional operators or codeshare partners and adversely impact our financial condition and operationsservices.

~~Delays~~A significant portion of our regional operations are conducted by third-party operators on our behalf, primarily under capacity purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risks of disruptions to their operations, which may result from many of the same risk factors disclosed in ~~scheduled~~this ~~aircraft~~report, ~~deliveries~~such oras the impact of adverse economic conditions, and other ~~loss~~risk factors, such as a bankruptcy restructuring of ~~anticipated~~any ~~fleet~~of ~~capacity~~the regional operators. We may ~~adversely~~also ~~impact~~experience disruption to our regional operations if we terminate the capacity purchase agreement with one or more of our current operators and transition the services to another provider. As our regional segment provides revenues to us directly and indirectly (by providing flow traffic to our hubs), any significant disruption to our regional operations would have a material adverse effect on our business, results of operations and financial ~~results~~condition.

~~The~~In ~~success~~addition, of our ~~business~~reliance ~~depends~~upon others to provide essential services on, ~~among~~behalf ~~other~~of ~~things,~~our ~~the~~operations ~~ability~~may toresult in our relative ~~operate~~inability anto ~~optimum~~control ~~number~~the efficiency and ~~type~~timeliness of ~~aircraft~~contract services. InWe ~~many~~have ~~cases,~~entered ~~the~~into ~~aircraft~~agreements wewith ~~intend~~contractors to ~~operate~~provide ~~are~~various ~~not~~facilities ~~yet~~and inservices required for our ~~fleet~~operations, ~~but~~including wedistribution ~~have~~and ~~contractual~~sale ~~commitments~~of toairline ~~purchase~~seat inventory, orprovision ~~lease~~of ~~them.~~information Iftechnology ~~for~~and ~~any~~services, ~~reason~~regional weoperations, ~~were~~aircraft ~~unable~~maintenance, toground ~~accept~~services orand ~~secure~~facilities, ~~deliveries of~~reservations ~~new~~and ~~aircraft~~baggage onhandling. ~~contractually~~Similar ~~scheduled~~agreements ~~delivery~~may ~~dates,~~be ~~this~~entered ~~could~~into ~~have~~in aany ~~negative~~new ~~impact~~markets onwe ~~our~~decide ~~business,~~to ~~operations~~serve. These ~~and~~agreements ~~financial~~are ~~performance~~generally subject to termination after notice by the third-party service provider. ~~Our~~We ~~failure~~are toalso ~~integrate~~at ~~newly~~risk ~~purchased~~should one ~~aircraft~~of ~~into~~these ~~our~~service ~~fleet~~providers ascease ~~planned~~operations, and ~~might~~there ~~require~~is usno toguarantee ~~seek~~that we could replace these ~~extensions~~providers ofon ~~the~~a ~~terms~~timely ~~for~~basis with ~~some~~comparably ~~leased~~priced ~~aircraft~~providers. ~~Such~~Volatility ~~unanticipated~~in ~~extensions~~fuel ~~may~~prices, ~~require~~disruptions us to ~~operate~~capital ~~existing~~markets ~~aircraft~~and ~~beyond~~adverse ~~the~~economic ~~point~~conditions atin ~~which~~general ithave issubjected ~~economically~~certain ~~optimal~~of these third-party regional carriers to ~~retire~~significant financial ~~them~~pressures, ~~resulting~~which inhave ~~increased~~led ~~maintenance~~to ~~costs~~several bankruptcies among these carriers. IfAny ~~new aircraft~~material ~~orders~~problems ~~are~~with ~~not~~the ~~filled~~efficiency onand atimeliness ~~timely~~of ~~basis~~contract services, weresulting from financial hardships or otherwise, could ~~face~~have ~~higher~~a ~~monthly~~material ~~rental~~adverse ~~rates~~effect on our business, results of operations and financial condition.

We26 ~~are dependent on a limited number of suppliers for aircraft, aircraft engines and parts.~~

WeTable are dependent on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. As a result, we are vulnerable to any problems associated with the supply of those aircraft, parts and engines, including design defects, mechanical problems, contractual performance by the suppliers, or adverse perception by the public that would result in customer avoidance or in actions by the FAA resulting in an inability to operate our aircraft. Contents

~~Our~~We ~~inability~~rely toon ~~operate~~third-party ~~profitably~~distribution ~~out~~channels ofand ~~Philadelphia~~must ~~International~~manage ~~Airport,~~effectively the ~~which is one of our hubs~~costs, ~~could~~rights ~~harm our business, financial condition~~ and ~~results~~functionality of ~~operations~~these channels.

~~Markets~~We ~~served~~rely ~~from~~on ~~Philadelphia~~third-party ~~International~~distribution ~~Airport (“PHL”)~~channels, ~~which~~including those isprovided ~~one~~by ofor ~~our~~through ~~hubs~~global ~~and~~distribution ~~our international gateway~~systems, ~~are~~or ~~important~~“GDSs” ~~to our operations~~(e.g., InAmadeus, ~~fiscal~~Sabre ~~year~~and ~~2012~~Travelport), ~~more~~conventional ~~than~~travel aagents ~~third~~and ofonline ~~our~~travel ~~daily~~agents, ~~available~~or ~~seat~~OTAs ~~miles~~ (~~“ASMs”)~~e.g., ~~and~~Expedia, ~~more~~Orbitz ~~than~~and ~~half~~Travelocity), ofto ~~our~~distribute ~~international~~a ~~ASMs were~~significant ~~flown~~portion ~~through~~of ~~PHL.~~our ~~PHL~~airline ~~plans~~tickets, ~~to embark on a multi-billion dollar runway~~ and ~~terminal~~we ~~expansion~~expect ~~project~~in ~~called~~ the ~~“Capacity~~future ~~Enhancement~~to ~~Program”~~continue ~~that~~to ~~will,~~rely ifon ~~undertaken~~these aschannels ~~planned,~~and ~~result~~hope into ~~huge~~expand ~~cost~~their ~~increases~~ability ~~for~~to ~~airlines~~distribute ~~serving~~and ~~PHL, including~~collect USrevenues ~~Airways.~~for ~~The~~ancillary ~~project~~products ~~has been approved by the FAA~~(e.g., ~~and~~fees ~~expenditures~~for ~~have~~selective ~~already begun~~seating). USThese ~~Airways~~distribution channels ~~has~~are ~~recently~~more ~~agreed~~expensive ~~with~~and ~~the~~at ~~Philadelphia~~present ~~Division~~have ofless ~~Aviation~~functionality toin arespect ~~two-year extension~~ of ~~its~~ancillary ~~PHL-Airport~~product ~~Use~~offerings ~~and~~than ~~Lease~~those ~~Agreement~~we ~~through June 30~~operate ourselves, ~~2015;~~such ~~this~~as ~~extension~~our iscall ~~subject~~centers toand ~~the~~our ~~Philadelphia City Council approval~~website. ~~Significant~~Certain ~~expenditures~~of ~~related~~these todistribution ~~the~~channels ~~runway~~also ~~can~~effectively ~~be made only with~~ restrict the ~~consent~~manner ofin USwhich ~~Airways~~we ~~and~~distribute ~~the~~our ~~new~~products ~~lease does not provide for such expenditures~~generally. ~~We cannot~~To ~~guarantee~~remain ~~that~~competitive, ~~the~~we ~~fees~~will ~~and~~need ~~other costs related~~ to ~~operating~~manage ~~out~~successfully ofour ~~PHL~~distribution ~~will~~costs ~~not~~and rights, increase ~~should~~our ~~this~~distribution orflexibility ~~other~~and ~~significant~~improve ~~expansion projects be implemented by~~ the ~~airport~~functionality ~~authority after expiration~~ of ~~the~~third-party ~~pending~~distribution channels, ~~lease~~while ~~extension.~~maintaining ~~In addition,~~an ifindustry-competitive wecost ~~are~~structure. ~~unable~~Any inability to ~~operate~~manage ~~profitably~~our ~~from~~third-party ~~PHL~~distribution costs, werights ~~may~~and ~~need~~functionality toat ~~significantly~~a ~~reduce~~competitive ~~our~~level ~~business~~or atany ~~Philadelphia~~material diminishment or ~~move~~disruption ~~that~~in ~~business~~the todistribution ~~another~~ of our tickets ~~hubs,~~could ~~either~~have ofa ~~which~~material ~~actions~~adverse ~~could~~effect beon ~~costly.~~our ~~Our~~ business, ~~financial condition and~~ results of operations ~~could be harmed by an increase in airport rates~~ and ~~fees~~financial ~~charged by PHL in connection with and following the airport expansion~~condition.

~~Our~~Further, ~~business~~on April 21, is2011, ~~subject~~US toAirways ~~weather~~filed ~~factors~~an antitrust lawsuit against Sabre Holdings Corporation, Sabre Inc. and ~~seasonal~~Sabre ~~variations~~Travel International Limited (collectively, “Sabre”) in ~~airline~~Federal ~~travel~~District Court for the Southern District of New York. The lawsuit alleges, among other things, that Sabre has engaged in anticompetitive practices that illegally restrain US Airways’ ability to distribute its products to its customers. The lawsuit also alleges that these actions have prevented US Airways from employing new competing technologies and have allowed Sabre to continue to charge US Airways supracompetitive fees. The lawsuit seeks both injunctive relief and money damages. Sabre filed a motion to dismiss the case, which ~~cause~~the ~~our~~court denied ~~results~~in part and granted in part in September 2011, allowing two of the four counts in the complaint to ~~fluctuate~~proceed. We intend to pursue our claims against Sabre vigorously, but there can be no assurance of the outcome of this litigation.

Our ~~operations~~business ~~are~~is ~~vulnerable~~subject to ~~severe~~extensive ~~weather~~government ~~conditions~~regulation, inwhich ~~parts~~may ofresult ~~our~~in ~~network~~increases ~~that~~in ~~could~~our ~~disrupt service~~costs, ~~create~~disruptions ~~air traffic control~~to ~~problems,~~our ~~decrease revenue and increase costs~~operations, ~~such~~limits ason ~~during~~our ~~hurricane~~operating ~~season in the Caribbean and Southeast United States~~flexibility, ~~snow~~reductions ~~and severe winter weather~~ in the ~~Northeast United States and thunderstorms in the Eastern United States. In addition, the air travel business historically fluctuates on a seasonal basis. Due to the greater~~ demand for air ~~and leisure~~ travel ~~during the summer months~~, ~~revenues in the airline industry in the second~~ and ~~third~~competitive ~~quarters of the year tend to be greater than revenues in the first and fourth quarters of the year~~disadvantages. Our results of operations will likely reflect weather factors and seasonality, and therefore quarterly results are not necessarily indicative of those for an entire year, and our prior results are not necessarily indicative of our future results.

29Airlines are subject to extensive domestic and international regulatory requirements. In the last several years, Congress has passed laws, and DOT, the FAA, the TSA and the Department of Homeland Security have issued a number of directives and other regulations, that affect the airline industry. These requirements impose substantial costs on us and restrict the ways we may conduct our business.

~~Table~~For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of ~~Contents~~aircraft that require significant expenditures or operational restrictions. Our failure to timely comply with these requirements has in the past and may in the future result in fines and other enforcement actions by the FAA or other regulators. In addition, the FAA recently issued its final regulations governing pilot rest periods and work hours for all airlines certificated under Part 121 of the Federal Aviation Regulations. The rule, which became effective on January 4, 2014, impacts the required amount and timing of rest periods for pilots between work assignments and modifies duty and rest requirements based on the time of day, number of scheduled segments, flight types, time zones, and other factors. These regulations, or other regulations, could have a material adverse effect on us and the industry.

~~Increases~~Recent inDOT consumer ~~insurance~~rules ~~costs~~require ornew ~~reductions~~procedures infor ~~insurance~~customer ~~coverage~~handling ~~may~~during ~~adversely~~long ~~impact~~onboard delays, further regulate airline interactions with passengers through the reservations process, at the airport, and on board the aircraft, and require new disclosures ~~our~~concerning ~~operations~~airline fares and ~~financial~~ancillary ~~results~~fees such as baggage fees. The DOT has been aggressively investigating alleged violations of these new rules. Other DOT rules apply to post-ticket purchase price increases and an expansion of tarmac delay regulations to international airlines.

The ~~terrorist~~Aviation ~~attacks of September 11, 2001 led to a significant increase in insurance premiums~~ and aTransportation ~~decrease~~Security inAct ~~the~~mandates insurance coverage available to commercial air carriers. Accordingly, our insurance costs increased significantly and our ability to continue to obtain insurance even at current prices remains uncertain. In addition, we have obtained third-party war risk (terrorism) insurance through a special program administered by the ~~FAA,~~federalization ~~resulting in lower premiums than if we had obtained this insurance in the commercial insurance market. The program has been~~of ~~extended,~~certain ~~with~~airport ~~the~~security ~~same~~procedures ~~conditions~~ and ~~premiums,~~imposes ~~until~~additional ~~September 30,~~security ~~2013.~~requirements Ifon ~~the~~airports ~~federal~~and ~~insurance program terminates~~airlines, wemost ~~would likely face a material increase in the cost~~ of ~~war~~which ~~risk~~are ~~insurance.~~funded ~~The~~by ~~failure of one or more of our insurers could result in~~ a ~~lack~~per-ticket oftax ~~coverage~~on ~~for~~passengers ~~a period of time. Additionally, severe disruptions in the domestic~~ and global financial markets could adversely impact the claims paying ability of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both the availability of appropriate insurance coverage and its cost. Because of competitive pressures in our industry, our ability to pass additional insurance costs to passengers is limited. As a ~~result,~~tax ~~further increases in insurance costs or reductions in available insurance coverage could have an adverse impact~~ on ~~our financial results~~airlines.

We The results of our operations, demand for air travel, and the manner in which we conduct business each may be ~~adversely~~ affected by changes ~~global~~in ~~events~~law ~~that~~and ~~affect~~future ~~travel~~actions ~~behavior.~~taken by governmental agencies, including:

~~Our~~• ~~revenue~~changes ~~and~~in ~~results~~law ofwhich ~~operations~~affect ~~may~~the ~~be adversely~~services ~~affected~~that bycan ~~global~~be ~~events~~offered ~~beyond~~by ~~our~~airlines ~~control.~~in Anparticular ~~outbreak~~markets ofand aat ~~contagious~~particular ~~disease such as Severe Acute Respiratory Syndrome (“SARS”)~~airports, ~~H1N1 influenza virus, avian flu,~~ or ~~any other influenza-type illness, if it were to persist for an extended period, could again materially affect~~ the ~~airline~~types ~~industry~~of ~~and~~fees usthat bycan ~~reducing~~be ~~revenues~~charged ~~and~~to ~~impacting travel behavior.~~ passengers;

We27 ~~are exposed to foreign currency exchange rate fluctuations.~~

As aTable result of our international operations, we have significant operating revenues and expenses, as well as assets and liabilities, denominated in foreign currencies. Fluctuations in foreign currencies can significantly affect our operating performance and the value of our assets and liabilities located outside of the United States. Contents

~~The~~• ~~use~~the granting and timing of UScertain ~~Airways Group’s~~governmental ~~net~~approvals ~~operating~~(including ~~losses~~antitrust ~~and~~or ~~certain~~foreign ~~other~~government ~~tax~~approvals) ~~attributes~~needed ~~could~~for becodesharing ~~limited~~alliances inand ~~the~~other ~~future.~~arrangements with other airlines;

~~When~~• arestrictions ~~corporation undergoes an ownership change, as defined in Section 382 of the Internal Revenue Code (“Section 382”), a limitation is imposed~~ on ~~the~~competitive ~~corporation’s~~practices ~~future ability to utilize any net operating losses~~ (~~“NOLs”) generated~~for ~~before the ownership change and certain subsequently recognized “built-in” losses and deductions~~example, ifcourt ~~any~~orders, ~~existing~~or asagency ofregulations ~~the~~or ~~date of the ownership change. We believe an “ownership change” as defined in Section 382 occurred for US Airways Group in February 2007. Since February 2007~~orders, ~~there have been additional changes in the ownership of US Airways Group~~ that, ifwould ~~combined~~curtail ~~with~~an sufficiently large future changes in ownership, could result in another “ownership change” as defined in Section 382. Until US Airways Group has used all of its existing NOLs, future shifts in ownership of US Airways Groupairline’s ~~common~~ability ~~stock~~to ~~could~~respond ~~result~~to ina ~~new Section 382 limitations on the use of our NOLs as of the date of an additional ownership change. An additional ownership change will occur upon consummation of the Merger with AMR.~~ competitor);

~~Risk~~• ~~Factors~~the ~~Relating~~adoption toof ~~the~~new ~~Merger~~passenger security standards or regulations that impact customer service standards (for example, a “passenger bill of rights);

On• ~~February~~restrictions ~~13,~~on ~~2013~~airport operations, USsuch ~~Airways~~as ~~Group~~restrictions ~~and~~on ~~AMR~~the ~~entered~~use ~~into~~of ~~the~~Slots ~~Merger~~at ~~Agreement,~~airports asor ~~more~~the ~~fully~~auction ~~described~~or ~~under~~reallocation ~~Item~~of 1slot ~~“Business~~rights –currently ~~Recent~~held ~~Developments.”~~by us; and

~~The~~• ~~Merger is subject to a number of conditions to~~ the ~~obligations~~adoption of ~~both~~more usrestrictive ~~and~~locally-imposed ~~AMR~~noise ~~that may not be fulfilled, which could cause the termination of the Merger Agreement~~restrictions.

~~The~~Each ~~Merger~~additional ~~Agreement~~regulation ~~contains~~or aother ~~number~~form of ~~customary~~regulatory ~~conditions~~oversight ~~to consummation~~increases ofcosts ~~the~~and ~~Merger,~~adds ~~such~~greater ascomplexity ~~the~~to ~~accuracy~~airline operations ~~of representations~~ and ~~warranties in all material respects~~, ~~the fulfillment of obligations set out~~ in ~~covenants,~~some ~~that certain consents and regulatory approvals have been obtained~~cases, ~~that~~may ~~there~~reduce ~~are no legal prohibitions against consummation of~~ the ~~Merger,~~demand ~~that~~for ~~approval~~air oftravel. ~~the~~There UScan ~~Airways~~be ~~Group~~no ~~stockholders~~assurance ~~has been received,~~ that anour ~~order~~compliance ~~from the Bankruptcy Court confirming AMR’s plan of reorganization is in effect, that the plan of reorganization conforms~~ with ~~the~~new ~~requirements of the Merger Agreement~~rules, ~~that~~anticipated ~~secured~~rules ~~indebtedness~~or ~~of the Debtors and certain~~ other ~~claims~~forms ~~against the Debtors not exceed specified levels, and other customary conditions. AMR has the right to unilaterally terminate the Merger Agreement under certain conditions. Many~~ of ~~the~~regulatory ~~conditions~~oversight ~~to consummation of the Merger are not within our control, and we cannot predict when or if these conditions~~ will ~~be satisfied. If any of these conditions are~~ not ~~fulfilled~~have ora ~~waived~~material ~~prior~~adverse toeffect ~~the~~on ~~termination date set forth in the Merger Agreement (October 14, 2013, as it may be extended), it is possible that the Merger will not be consummated~~us.

30In April 2013, the FAA announced the imposition of furloughs that resulted in reduced staffing, including among air traffic controllers, in connection with its implementation of budget reductions related to the federal government’s response to the so-called “sequester” of government funding. These furloughs have been suspended as a result of Congressional legislation. However, we cannot predict whether there will be further furloughs or the impact of any such furloughs on our business. Any significant reduction in air traffic capacity at key airports in the U.S. could have a material adverse effect on our business, results of operations and financial condition.

~~Table~~We also experienced delays in routine non-operational interactions with the FAA as a result of ~~Contents~~the government shut-down in 2013, and we may experience delays again in the event of any future government shut-down.

~~The~~In ~~Merger~~addition, the ATC system is ~~subject~~not tosuccessfully managing the ~~receipt~~growing ofdemand ~~consents~~for ~~and~~U.S. ~~clearances~~air ~~from~~travel. ~~certain~~Air ~~domestic~~traffic controllers rely on outdated technologies that routinely overwhelm the system and ~~foreign~~compel ~~regulatory~~airlines ~~authorities~~to ~~that~~fly ~~may~~inefficient, ~~impose~~indirect ~~conditions~~routes. ~~that~~On ~~could~~February 14, ~~have~~2012, athe ~~material~~FAA Modernization and ~~adverse~~Reform ~~effect~~Act onof 2012 was signed. The law provides funding for the ~~surviving~~FAA ~~company~~to rebuild its ATC system, orincluding ~~that~~switching ~~could~~from ~~delay~~radar ~~or,~~to ifa ~~not~~GPS-based ~~obtained,~~system. ~~prevent~~It is uncertain when any improvements to the ~~completion~~ATC ofsystem will take effect. Failure to update the ~~Merger~~ATC system in a timely manner and the substantial funding requirements that may be imposed on airlines of a modernized air traffic control system may have a material adverse effect on our business.

~~Before~~The ability ~~the~~of ~~Merger~~U.S. ~~can~~airlines beto ~~completed,~~operate ~~applicable~~international ~~waiting~~routes ~~periods~~is ~~must~~subject ~~expire~~to orchange ~~terminate~~because ~~under~~the ~~antitrust~~applicable ~~laws~~arrangements ~~and~~between ~~various~~the ~~approvals, consents~~U.S. orand ~~clearances~~foreign ~~must~~governments may be ~~obtained~~amended from ~~certain~~time ~~domestic~~to time and ~~foreign~~appropriate ~~regulatory~~Slots ~~entities,~~or ~~including~~facilities ~~those~~may ~~regulating~~not ~~the~~be ~~provision~~made available. ofWe ~~commercial~~currently ~~aviation~~operate ~~services.~~on Ina ~~deciding~~number ~~whether~~of tointernational ~~grant~~routes ~~antitrust~~under orgovernment ~~regulatory~~arrangements ~~clearances,~~that limit the ~~relevant antitrust~~number ~~authorities~~of ~~will~~airlines ~~consider~~permitted to operate on the ~~effect~~route, the capacity of the ~~Merger~~airlines providing services on ~~competition~~the ~~within~~route, ~~their~~or ~~relevant~~the ~~jurisdictions~~number of airlines allowed access to particular airports. ~~The~~If ~~terms~~an ~~and~~open ~~conditions~~skies ofpolicy ~~approvals~~were ~~that~~to ~~are~~be ~~granted~~adopted ~~may~~for ~~impose~~any ~~requirements,~~of ~~limitations~~these routes, ~~costs~~such oran ~~restrictions~~event oncould ~~the~~have ~~conduct~~a ofmaterial ~~the surviving~~adverse ~~company’s~~impact ~~business~~on ~~following~~us and could result in the ~~Merger.~~impairment ~~There~~of ~~can~~material beamounts noof ~~assurance~~our ~~that~~related tangible ~~regulators~~and ~~will~~intangible ~~not~~assets. ~~impose~~In ~~terms~~addition, ~~conditions,~~competition ~~requirements~~from revenue-sharing joint ventures, ~~limitations~~JBAs, ~~costs~~and orother ~~restrictions~~alliance ~~that~~arrangements ~~would~~by ~~delay~~and ~~completion~~among ofother airlines could impair the ~~Merger,~~value ~~impose~~of ~~additional material~~our ~~costs~~business and assets on orthe ~~limit~~open skies routes. For example, the ~~revenues~~open ofskies air services agreement between the ~~surviving~~U.S. ~~company~~and the EU, orwhich ~~limit~~took ~~some~~effect orin ~~all~~March of2008, provides airlines from the ~~synergies~~U.S. and EU member states open access to each other’s ~~benefits~~markets, wewith ~~anticipate~~freedom ~~following~~of pricing and unlimited rights to fly from the ~~Merger~~U.S. Into ~~addition~~any airport in the EU, weincluding ~~cannot~~London’s ~~provide~~Heathrow ~~assurance~~Airport. ~~that~~As ~~any~~a ~~such~~result ~~terms~~of the agreement, ~~conditions~~we face increased competition in these markets, ~~requirements~~including Heathrow Airport. In addition, ~~limitations,~~ ~~costs~~the oropen ~~restrictions~~skies ~~will~~agreement ~~not~~between ~~result~~the U.S. and Brazil, which was signed in a2010 ~~material~~and ~~delay~~takes full effect in 2015, orhas ~~the~~resulted ~~abandonment~~in ~~of,~~increased competition in the ~~Merger~~U.S./Brazil market.

~~The Merger~~28 is subject to the receipt of numerous approvals, including approvals from US Airways Group’s stockholders and confirmation of our plan of reorganization by the Bankruptcy Court. Failure to obtain any of these approvals would prevent the completion of the Merger.

TheTable Merger Agreement will not be binding on either us or AMR until the Bankruptcy Court enters an order approving its enforceability. In addition, before the Merger can be completed, US Airways Group must submit the Merger to a vote of its stockholders, US Airways Group’s stockholders must have approved the Merger, AMR must obtain the approval of the plan of reorganization contemplating the Merger by the requisite percentage of each class of claimholder (as determined pursuant to the Bankruptcy Code), and the Bankruptcy Court must enter an order confirming our plan of reorganization and consummation of the Merger. There can be no assurance that any of these approvals will occur. Failure to obtain these required approvals within the expected time frame, or having to make significant changes to the structure, terms or conditions of the Merger to obtain such approvals, may result in a material delay in, or the abandonment of, the Merger. Contents

~~Any~~The ~~delay~~airline inindustry ~~completing~~is ~~the~~heavily ~~Merger may reduce or eliminate the benefits expected to be achieved thereunder~~taxed.

InThe ~~addition~~airline toindustry ~~the~~is ~~required~~subject ~~regulatory~~to ~~clearances~~extensive government fees and ~~approvals~~taxation ~~discussed~~that ~~above,~~negatively ~~the~~impact ~~Merger~~our revenue. The U.S. airline industry is ~~subject~~one toof athe ~~number~~most heavily taxed of ~~other conditions~~all ~~beyond~~industries. ~~our~~These ~~control~~fees ~~that~~and ~~may~~taxes ~~prevent~~have grown significantly in the past decade for domestic flights, ~~delay~~and orvarious ~~otherwise~~U.S. ~~materially~~fees and ~~adversely~~taxes ~~affect~~also ~~its~~are ~~completion~~assessed on international flights. WeFor ~~cannot~~example, ~~predict~~as ~~when~~permitted by orfederal iflegislation, ~~these~~most ~~other~~major ~~conditions~~U.S. ~~will~~airports beimpose ~~satisfied~~a passenger facility charge per passenger on us. ~~Furthermore~~In addition, the ~~requirements~~governments ~~for~~of ~~obtaining~~foreign ~~the~~countries ~~required~~in which we operate impose on U.S. airlines, including us, various fees and taxes, and these ~~clearances~~assessments have been increasing in number and ~~approvals~~amount ~~could~~in ~~delay~~recent ~~the~~years. ~~completion~~Moreover, ofwe ~~the~~are ~~Merger~~obligated ~~for~~to collect a ~~significant~~federal ~~period~~excise oftax, ~~time~~commonly orreferred ~~prevent~~to itas ~~from~~the ~~occurring.~~“ticket ~~Any~~tax,” ~~delay~~on indomestic ~~completing~~and ~~the~~international ~~Merger~~air ~~could~~transportation. ~~cause~~We collect the excise ~~surviving~~tax, ~~company~~along with certain other U.S. and foreign taxes and user fees on air transportation (such as a per-ticket tax on passengers to ~~fail~~fund the TSA, which fee is scheduled to ~~realize~~increase ~~some~~effective orJuly 1, ~~all~~2014), ofand pass along the ~~synergies~~collected amounts to the appropriate governmental agencies. Although these taxes are not operating expenses, they represent an additional cost to our customers. There are continuing efforts in Congress and in other ~~benefits~~countries ~~that~~to weraise ~~anticipate~~different ifportions of the various ~~Merger~~taxes, isfees, ~~successfully~~and ~~completed~~charges ~~within~~imposed ~~its~~on ~~expected~~airlines ~~time~~and ~~frame~~their passengers. Increases in such taxes, fees and charges could negatively impact our business, results of operations and financial condition.

~~Failure~~Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise to our customers. ~~complete~~Due to the ~~Merger~~competitive ~~could~~revenue ~~adversely~~environment, ~~affect~~many increases in these fees and taxes have been absorbed by the airline industry rather than being passed on to the customer. Further increases in fees and taxes may reduce demand for air travel, and thus our ~~business~~revenues. For example, in January 2014, Congress restructured the September 11th security fee which will increase the fee on some customers.

IfChanges ~~the~~to ~~Merger is not completed,~~ our ~~ongoing~~ business ~~may~~model bethat ~~adversely~~are ~~affected,~~designed ~~and~~to weincrease ~~will~~revenues may not be ~~subject~~successful toand ~~several~~may ~~risks,~~cause ~~including~~operational difficulties ~~the~~or ~~following:~~decreased demand.

•We wehave implemented several new measures designed to increase revenue and offset costs. These measures include charging separately for services that had previously been included within the price of a ticket and increasing other pre-existing fees. We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be ~~required~~more difficult to ~~pay~~identify ~~termination~~and ~~fees~~implement ofadditional ~~$55~~initiatives. ~~million~~We cannot assure you that these new measures or ~~$195~~any ~~million~~future ~~under~~initiatives ~~certain~~will ~~circumstances~~be ~~provided~~successful in increasing our revenues. Additionally, the ~~Merger~~implementation ~~Agreement;~~of these initiatives creates logistical challenges that could harm the operational performance of our airline. Also, the new and increased fees might reduce the demand for air travel on our airline or across the industry in general, particularly if weakened economic conditions continue to make our customers more sensitive to increased travel costs or provide a significant competitive advantage to other carriers that determine not to institute similar charges.

•The ~~unless~~loss ~~and~~of ~~until~~key itpersonnel isupon ~~terminated,~~whom we ~~will~~depend beto ~~prohibited~~operate byour ~~the~~business ~~Merger~~or ~~Agreement~~the ~~from~~inability ~~seeking~~to ~~certain~~attract ~~strategic~~additional ~~alternatives,~~qualified personnel ~~such as transactions with third parties other than AMR, and~~ could ~~therefore~~adversely ~~miss~~affect ~~attractive~~our ~~alternatives~~business. ~~to the Merger;~~

•We believe that our ~~operations~~future success will bedepend ~~restricted~~in bylarge ~~the~~part ~~terms~~on our ofability ~~the~~to ~~Merger~~retain ~~Agreement~~or attract highly qualified management, ~~which~~technical and other personnel. We may ~~cause~~not usbe successful in retaining key personnel or in attracting other highly qualified personnel. Any inability to ~~forego~~retain ~~otherwise~~or ~~attractive~~attract significant numbers of qualified management and other personnel would have a material adverse effect on our business, ~~opportunities;~~results of operations and financial condition.

•We wemay ~~will~~ be ~~required~~adversely toaffected ~~pay~~by ~~certain~~conflicts ~~costs~~overseas ~~relating to the Merger, whether~~ or ~~not~~terrorist itattacks; isthe ~~consummated,~~travel ~~such~~industry ascontinues ~~legal,~~to ~~accounting,~~face ~~financial~~ongoing security ~~advisor~~concerns. ~~and printing fees, which costs could be substantial; and~~

•Acts ~~our~~of ~~management~~terrorism ~~will~~or ~~have~~fear ~~focused~~of ~~its~~such ~~attention~~attacks, including elevated national threat warnings, wars or other military conflicts, may depress air travel, particularly on ~~negotiating~~international routes, and ~~preparing~~cause ~~for~~declines in revenues and increases in costs. The attacks of September 11, 2001 and continuing terrorist threats and attempted attacks materially impacted and continue to impact air travel. Increased security procedures introduced at airports since the ~~Merger~~attacks ~~instead~~and other such measures as may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved flight deck security, deployment of federal air marshals on ~~pursuing~~board ~~other~~flights, ~~opportunities~~improved ~~that~~airport ~~could~~perimeter ~~have~~access ~~been~~security, ~~beneficial~~airline crew security training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of security screening personnel, additional provision of passenger data to usU.S. Customs and enhanced background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue.

If29 ~~the Merger is not completed, there can be no assurance that these risks will not materialize and will not adversely affect our business.~~

31Table of Contents

~~Table~~We ofoperate ~~Contents~~a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control.

~~The~~We ~~Merger~~operate ~~Agreement~~a ~~contains~~global ~~customary~~business ~~restrictions~~with onoperations outside of the U.S. from which we derived approximately 19% of our ~~ability~~operating revenues in 2013, as measured and reported to ~~seek~~the DOT. Our current international activities and prospects have been and in the future could be adversely affected by reversals or delays in the opening of foreign markets, exchange controls or other ~~strategic~~restrictions ~~alternatives~~on repatriation of funds, currency and political risks (including changes in exchange rates and currency devaluations), environmental regulation, increases in taxes and fees and changes in international government regulation of our operations, including the inability to obtain or retain needed route authorities and/or slots.

~~The~~We ~~Merger~~are ~~Agreement~~subject ~~contains “no shop” provisions that restrict our ability~~ to ~~initiate,~~many ~~solicit,~~forms ~~or knowingly encourage or facilitate competing third-party proposals for any business combination transaction involving a merger~~ of usenvironmental ~~with~~regulation ~~another~~and ~~entity or the acquisition of a significant portion of our stock or assets, although we~~ may ~~consider~~incur ~~competing,~~substantial ~~unsolicited~~costs ~~proposals~~as ~~and enter into discussions or negotiations regarding such proposals if our board of directors determines that any such acquisition proposal constitutes, or is reasonably likely to lead to,~~ a ~~superior~~ ~~proposal and that the failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of the board of directors to us and our stockholders under applicable law~~result. In addition, AMR generally has an opportunity to offer to modify the terms of the Merger in response to any competing acquisition proposal. If we were to terminate the Merger Agreement to accept a superior proposal, we would be required to pay a termination fee of $55 million to AMR.

~~These~~We ~~provisions,~~are ~~although~~subject ~~customary~~to increasingly ~~for~~stringent ~~these~~federal, ~~types of transactions~~state, ~~could~~local ~~discourage~~and aforeign ~~potential~~laws, ~~third-party~~regulations ~~acquirer~~and ~~that~~ordinances ~~might~~relating ~~have an~~to ~~interest~~the inprotection ~~acquiring all or a significant portion~~ of ~~our~~the ~~company~~environment, ~~from~~including ~~proposing~~those ~~any~~relating ~~such~~to ~~acquisition,~~emissions ~~even~~to if the ~~potential~~air, ~~third-party~~discharges ~~acquirer were prepared~~ to ~~pay~~surface ~~consideration~~and ~~with~~subsurface awaters, ~~higher~~safe ~~cash or market value than the market value proposed~~drinking towater, beand ~~received or realized in~~ the ~~Merger~~management orof ~~might~~hazardous ~~result~~substances, inoils aand ~~potential~~waste ~~third-party~~materials. ~~acquirer~~Compliance ~~proposing~~with toall ~~pay~~environmental alaws ~~lower~~and ~~consideration~~regulations tocan ~~our~~require ~~stockholders~~significant ~~than~~expenditures, itand ~~might~~violations ~~otherwise~~can ~~have~~lead ~~proposed~~ to ~~pay~~significant ~~because~~fines ofand ~~the added expense of the $55 million termination fee that will become payable in connection with the termination of the Merger Agreement by us~~penalties.

IfThe EPA has proposed changes to underground storage tank regulations that could affect certain airport fuel hydrant systems. Airport systems that fall within threshold requirements would need to be modified in order to comply with applicable regulations. Additionally, the ~~Merger~~EPA has proposed the draft 2013 National Pollutant Discharge Elimination System General Permit for ~~Agreement~~Stormwater isDischarges ~~terminated~~from ~~and~~Industrial weActivities. ~~determine~~This permit would impose new limitations on certain discharges along with mandatory best management practices. Concurrently, California has proposed the State Final Draft Industrial General Permit for stormwater discharges. This permit employs the use of benchmark values to ~~seek~~trigger ~~another~~response ~~business~~actions ~~combination~~when exceeding those limits and eliminates group monitoring. These permits have not been finalized, weand ~~may~~cost estimates have not bebeen ~~able~~defined, tobut US ~~negotiate~~Airways along with other airlines would share a ~~transaction~~portion ~~with~~of ~~another~~these ~~party~~costs onat ~~terms~~applicable ~~comparable~~airports. In addition to the proposed EPA and state regulations, orseveral ~~better~~U.S. ~~than~~airport authorities are actively engaged in efforts to limit discharges of de-icing fluid to the environment, often by requiring airlines to participate in the ~~terms~~building or reconfiguring of ~~the~~airport ~~Merger~~de-icing facilities. Such efforts are likely to impose additional costs and restrictions on airlines using those airports. We do not believe, however, that such environmental developments will have a material impact on our capital expenditures or otherwise materially adversely affect our operations, operating costs or competitive position.

~~The~~We ~~surviving~~are ~~company~~also ~~may~~subject to other environmental laws and regulations, including those that require us to investigate and remediate soil or groundwater to meet certain objectives. Under federal law, generators of waste materials, and current and former owners or operators of facilities, can be ~~unable~~subject to ~~integrate~~liability ~~our~~for investigation and ~~AMR’s~~remediation ~~businesses~~costs ~~successfully~~at locations that have been identified as requiring response actions. Liability under these laws may be strict, joint and ~~realize~~several, meaning that we could be liable for the ~~anticipated~~costs ~~benefits~~of cleaning up environmental contamination regardless of fault or the ~~Merger~~amount of wastes directly attributable to us. We have liability for investigation and remediation costs at various sites, although such costs are currently not expected to have a material adverse effect on our business.

~~The~~We ~~Merger~~have ~~involves~~various ~~the~~leases ~~combination~~and ofagreements ~~two~~with ~~companies~~respect ~~that~~to ~~currently~~real ~~operate~~property, astanks ~~independent~~and ~~public companies,~~pipelines ~~each~~with ofairports ~~which~~and ~~operates~~other ~~its~~operators. Under ~~own~~these ~~international~~leases ~~network~~and ~~airline. Historically~~agreements, we have agreed to indemnify the ~~integration~~lessor ofor ~~separate~~operator ~~airlines~~against ~~has~~environmental ~~often~~liabilities ~~proven~~associated towith bethe ~~more~~real ~~time~~property ~~consuming~~or ~~and~~operations ~~require~~described ~~more~~under ~~resources~~the ~~than~~agreement, ~~initially~~even ~~estimated.~~if ~~The~~we ~~surviving~~are ~~company~~not ~~will~~the beparty responsible for the ~~required~~initial toevent ~~devote~~that ~~significant~~caused ~~management~~the ~~attention~~environmental ~~and~~damage. ~~resources~~We toalso ~~integrating~~participate ~~our~~in ~~and~~leases ~~AMR’s~~with ~~business~~other ~~practices,~~airlines ~~cultures~~in ~~and~~fuel ~~operations.~~consortiums ~~Potential~~and ~~difficulties~~fuel ~~the~~committees ~~surviving~~at ~~company~~airports, ~~may~~where ~~encounter~~such asindemnities ~~part~~are ofgenerally ~~the~~joint ~~integration~~and ~~process~~several ~~include~~ among the ~~following:~~participating airlines.

•There is increasing global regulatory focus on climate change and greenhouse gas emissions. For example, the ~~inability~~EU has established the Emissions Trading Scheme (“ETS”) to ~~successfully~~regulate ~~combine~~carbon ~~our~~dioxide ~~business~~emissions ~~with~~in the EU. The EU adopted a directive under which each EU member state is required to extend the ETS to aviation operations. This directive would have required us, beginning in 2012, to annually submit emission allowances in order to operate flights to and from airports in the European Economic Area (“EEA”), including flights between the U.S. and EU member states. However, in an effort to allow ICAO time to propose an alternate scheme to manage global aviation emissions, in April 2013 the EU suspended for one year the ETS’ application to flights entering and departing the EEA, limiting its application, for flights flown in 2012, to intra-EEA flights only. In October 2013, the ICAO Assembly adopted a resolution calling for the development through ICAO of a global, market-based scheme for aviation emissions, to be implemented in 2020. Subsequently, the EU has proposed amending the EU ETS so that the monitoring, reporting and submission of ~~AMR~~allowances for emissions from flights flown in a2013 ~~manner~~would continue to be limited to only intra-EEA flights. For flights flown from 2014 to 2020, the scope of coverage under the amendment would include intra-EEA flights and the portion of aviation emissions of flights to and from EU member states that ~~permits~~take place in European regional airspace. The U.S. enacted legislation in November 2012 which encourages the ~~surviving~~DOT ~~company~~to seek an international solution through ICAO and that will allow the U.S. Secretary of Transportation to ~~achieve~~prohibit U.S. airlines from participating in the ~~synergies~~ETS. Ultimately, the scope and application of ETS or other ~~benefits~~emissions ~~anticipated~~trading schemes to ~~result~~our ~~from~~operations, now or in the ~~Merger;~~near future, remains uncertain. We do not anticipate any significant emissions allowance expenditures in 2014. Beyond 2014, compliance with the ETS or similar emissions-related requirements could significantly increase our operating costs. Further, the potential impact of ETS or other emissions-related requirements on our costs will ultimately depend on a number of factors, including baseline emissions, the price of emission allowances and the number of future flights subject to ETS or other emissions-related requirements. These costs have not been completely defined and could fluctuate.

•30 the challenge of integrating complex systems, operating procedures, regulatory compliance programs, technology, aircraft fleets, networks and other assets of the two companies in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;

•Table the challenge of integrating the workforces of the two companies while maintaining focus on providing consistent, high quality customer service and running an efficient operation; andContents

•Similarly, ~~potential~~within ~~unknown~~the ~~liabilities~~U.S., ~~liabilities~~there is an increasing trend toward regulating greenhouse gas emissions directly under the Clean Air Act. While the EPA’s recent regulatory activity in this area has focused on industries other than aviation, it is possible that future EPA regulations, or new legislation, could impact airlines. Several states are ~~significantly~~also ~~larger~~considering ~~than~~initiatives weto ~~currently~~regulate ~~anticipate~~emissions ~~and~~of ~~unforeseen~~greenhouse ~~increased~~gases, ~~expenses~~primarily through the planned development of greenhouse gas emissions inventories and/or ~~delays~~regional ~~associated~~greenhouse ~~with~~gas cap and trade programs. These regulatory efforts, both internationally and in the ~~Merger~~U.S. at the federal and state levels, ~~including~~are ~~one-time~~still ~~cash~~developing, ~~costs~~and towe ~~integrate~~cannot yet determine what the ~~two~~final ~~businesses~~regulatory ~~that~~programs ~~may~~will ~~exceed~~be in the ~~approximately~~U.S., $1the EU or in other areas in which we do business.2 However, ~~billion~~such ofclimate ~~one~~change-~~time~~related ~~cash~~regulatory ~~costs~~activity ~~that~~in wethe ~~currently~~future ~~anticipate~~may adversely affect our business and financial results by requiring us to reduce our emissions, purchase allowances or otherwise pay for our emissions. Such activity may also impact us indirectly by increasing our operating costs, including fuel costs.

~~Accordingly,~~Governmental ~~even~~authorities ifin ~~the~~several ~~Merger~~U.S. and isforeign ~~consummated~~cities are also considering, ~~the~~or ~~contemplated~~have ~~benefits~~already ~~may~~implemented, ~~not~~aircraft benoise ~~realized~~reduction ~~fully~~programs, orincluding atthe ~~all,~~imposition orof ~~may~~nighttime curfews and limitations on daytime take-offs ~~longer~~and landings. We have been able to accommodate local noise ~~realize~~restrictions ~~than~~imposed ~~expected~~to date, but our operations could be adversely affected if locally-imposed regulations become more restrictive or widespread.

InWe ~~addition,~~rely ~~both~~heavily ~~AMR~~on technology and weautomated ~~have~~systems ~~operated~~to ~~and~~operate our business, ~~until~~and ~~the~~any ~~completion~~failure of ~~the~~these ~~Merger,~~technologies ~~will continue to~~or ~~operate~~systems ~~independently.~~could Itharm isour ~~possible~~business, ~~that~~results ~~the~~of ~~integration~~operations ~~process~~and ~~could~~financial ~~result~~condition. ~~in:~~

•We ~~diversion~~are highly dependent on technology and automated systems to operate our business and achieve low operating costs. These technologies and systems include our computerized airline reservation systems, flight operations systems, financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a timely manner. Substantially all of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic tickets. If our automated systems are not functioning or if our third-party service providers were to fail to adequately provide technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service disruptions or delays, which could harm our business and result in the ~~attention~~loss of important data, increase our expenses and decrease our revenues. In the ~~surviving~~event ~~company’s~~that ~~management~~one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition time to a new system may be significant. Our automated systems cannot be completely protected against other ~~employees;~~events that are beyond our control, including natural disasters, power failures, terrorist attacks, cyber-attacks, data theft, equipment and software failures, computer viruses or telecommunications failures. Substantial or sustained system failures could cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure you that our security measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays. Disruption in or changes to these systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.

•We ~~the~~face ~~disruption~~challenges ~~of,~~in orintegrating ~~the~~our ~~loss of momentum in~~computer, ~~the~~communications ~~surviving~~and ~~company’s~~other ~~ongoing~~technology ~~business~~systems. ~~or inconsistencies in standards, controls, procedures and policies,~~

~~any~~Among the principal risks of ~~which~~integrating ~~could~~our ~~materially~~businesses and ~~adversely~~operations ~~affect~~are the ~~surviving~~risks ~~company’s~~relating ~~ability~~ to ~~maintain~~integrating ~~relationships with~~various ~~customers~~computer, communications ~~suppliers~~and other technology systems, ~~employees~~including designing and ~~other~~implementing ~~constituencies~~an orintegrated ~~the~~customer ~~surviving~~reservations ~~company’s~~system, ~~ability~~that will be necessary to operate US Airways and American as a single airline and to achieve cost synergies by eliminating redundancies in the ~~anticipated~~businesses. ~~benefits~~The integration of these systems in a number of prior airline mergers has taken longer, been more disruptive and cost more than originally forecast. The implementation process to integrate these various systems will involve a number of risks that could adversely impact our business, results of operations and financial condition. New systems will replace multiple legacy systems and the ~~Merger~~related implementation will be a complex and time-consuming project involving substantial expenditures for implementation consultants, system hardware, software and implementation activities, as well as the transformation of business and financial processes.

3231

~~Risks~~As ~~Relating~~with any large project, there will be many factors that may materially affect the schedule, cost and execution of the integration of our computer, communications and other technology systems. These factors include, among others: problems during the design, implementation and testing phases; systems delays and/or malfunctions; the risk that suppliers and contractors will not perform as required under their contracts; the diversion of management attention from daily operations to ~~Our~~the ~~Common~~project; ~~Stock~~reworks due to unanticipated changes in business processes; challenges in simultaneously activating new systems throughout our global network; difficulty in training employees in the operations of new systems; the risk of security breach or disruption; and other unexpected events beyond our control. We cannot assure you that our security measures, change control procedures or disaster recovery plans will be adequate to prevent disruptions or delays. Disruptions in or changes to these systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.

~~The~~Ongoing ~~price~~data ofsecurity ~~our~~compliance ~~common~~requirements ~~stock~~could ~~has~~increase ~~recently~~our ~~been~~costs, and ~~may~~any insignificant ~~the~~data ~~future~~breach becould ~~volatile~~harm our business, results of operations and financial condition.

~~The~~Our ~~market~~business ~~price~~requires the appropriate and secure utilization of ~~our~~customer ~~common~~and ~~stock~~other ~~may~~sensitive ~~fluctuate~~information. ~~substantially~~We ~~due~~cannot be certain that advances in criminal capabilities (including cyber-attacks or cyber intrusions over the Internet, malware, computer viruses and the like), discovery of new vulnerabilities or attempts to aexploit ~~variety~~existing vulnerabilities in our systems, other data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology protecting the networks that access and store sensitive information. The risk of ~~factors~~a security breach or disruption, ~~many~~particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of ~~which~~attempted ~~are~~attacks ~~beyond~~and ~~our~~intrusions ~~control~~from around the world have increased. Furthermore, there has been heightened legislative and regulatory focus on data security in the U.S. and abroad (particularly in the EU), including: requirements for varying levels of customer notification in the event of a data breach.

•In addition, many of our ~~operating~~commercial ~~results~~partners, ~~failing~~including tocredit card companies, have imposed data security standards that we must meet. In particular, we are required by the ~~expectations~~Payment Card Industry Security Standards Council, founded by the credit card companies, to comply with their highest level of ~~securities~~data ~~analysts~~security orstandards. ~~investors;~~While we continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and could increase our costs.

•Failure ~~changes~~to incomply with the Payment Card Industry Standards or other privacy and data use and security requirements of our partners or related laws, rules and regulations to which we are subject may expose us to claims for contract breach, fines, sanctions or other penalties, which could materially and adversely affect our business, results of operations and financial condition. ~~estimates~~In addition, failure to address these issues appropriately could also give rise to additional legal risks, which, in turn, could increase the size and number of litigation claims and damages asserted or ~~recommendations~~subject byus ~~securities~~to ~~analysts;~~enforcement actions, fines and penalties and cause us to incur further related costs and expenses.

•We ~~material~~are ~~announcements~~at byrisk usof losses and adverse publicity stemming from any accident involving any of our aircraft or the aircraft of our ~~competitors;~~regional or codeshare operators.

•If ~~movements~~one of our aircraft, an aircraft that is operated under our brand by one of our regional operators or an aircraft that is operated by an airline with which we have a marketing alliance or codeshare relationship were to be involved in ~~fuel~~an ~~prices;~~accident, we could be exposed to significant tort liability. The insurance we carry to cover damages arising from any future accidents may be inadequate. In the event that our insurance is not adequate, we may be forced to bear substantial losses from an accident. In addition, any accident involving an aircraft that we operate, an aircraft that is operated under our brand by one of our regional operators or an aircraft that is operated by an airline that is one of our codeshare partners could create a public perception that our aircraft or those of our regional operators or codeshare partners are not safe or reliable, which could harm our reputation, result in air travelers being reluctant to fly on our aircraft or those of our regional operators or codeshare partners and adversely impact our business, results of operations and financial condition.

•Delays ~~new~~in ~~regulatory~~scheduled ~~pronouncements~~aircraft deliveries or other loss of anticipated fleet capacity, and ~~changes~~failure inof ~~regulatory~~new ~~guidelines;~~aircraft to perform as expected, may adversely impact our business, results of operations and financial condition.

•The success ~~general~~of our business depends on, among other things, the ability to operate an optimum number and ~~industry-specific~~type ~~economic~~of ~~conditions;~~aircraft. In many cases, the aircraft we intend to operate are not yet in our fleet, but we have contractual commitments to purchase or lease them. If for any reason we were unable to accept or secure deliveries of new aircraft on contractually scheduled delivery dates, this could have a negative impact on our business, results of operations and financial condition. Our failure to integrate newly purchased aircraft into our fleet as planned might require us to seek extensions of the terms for some leased aircraft or otherwise delay the exit of certain aircraft from our fleet. Such unanticipated extensions or delays may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs. If new aircraft orders are not filled on a timely basis, we could face higher operating costs than planned. In addition, if the aircraft we receive do not meet expected performance or quality standards, including with respect to fuel efficiency and reliability, our business, results of operations and financial condition could be adversely impacted.

•32 ~~public sales of a substantial number of shares of our common stock; and~~

•Table generalof market conditions.Contents

~~Conversion~~We ofdepend ~~our~~on ~~convertible~~a ~~notes~~limited ~~will~~number ~~dilute the ownership interest~~ of ~~existing~~suppliers ~~stockholders~~for ~~and~~aircraft, ~~could~~aircraft ~~adversely affect the~~engines ~~market~~and ~~price of our common stock~~parts.

~~The~~We ~~conversion~~depend ofon ~~some~~a orlimited ~~all~~number of USsuppliers ~~Airways~~for ~~Group’s~~aircraft, ~~7.25%~~aircraft ~~convertible~~engines ~~senior notes~~and ~~due~~many ~~2014~~aircraft ~~will~~and ~~dilute~~engine parts. ~~the~~As ~~ownership~~a ~~interests~~result, ofwe ~~existing~~are ~~stockholders.~~vulnerable ~~Any~~to ~~sales~~any inproblems ~~the~~associated ~~public~~with ~~market~~the supply of ~~the~~those ~~common~~aircraft, ~~stock~~parts ~~issuable~~and ~~upon~~engines, ~~such~~including ~~conversion~~design ~~could~~defects, ~~adversely~~mechanical ~~affect~~problems, ~~prevailing~~contractual ~~market~~performance ~~prices~~by ofthe ~~our~~suppliers, ~~common~~or ~~stock.~~adverse Inperception ~~addition,~~by the ~~existence~~ ofpublic ~~the~~that would ~~convertible~~result ~~notes~~in ~~may~~customer ~~encourage~~avoidance ~~short~~or ~~selling~~in actions by ~~market~~the ~~participants~~FAA ~~executing~~resulting ~~hedging~~in ~~strategies~~an inability to operate our aircraft.

~~Certain~~Our business ~~provisions~~has ofbeen ~~the amended~~ and ~~restated~~will ~~certificate~~continue ofto ~~incorporation~~be ~~and~~affected ~~amended~~by ~~and~~many ~~restated~~changing ~~bylaws~~economic ofand USother ~~Airways~~conditions ~~Group make~~beyond itour ~~difficult~~control, ~~for~~including ~~stockholders~~global toevents ~~change~~that ~~the~~affect ~~composition~~travel ofbehavior, and our ~~board~~results of ~~directors~~operations ~~and~~could ~~may~~be ~~discourage~~volatile ~~takeover~~and ~~attempts~~fluctuate ~~that~~due ~~some of our stockholders might consider beneficial~~to seasonality.

~~Certain~~Our ~~provisions~~business, results of ~~the~~operations ~~amended~~ and ~~restated~~financial ~~certificate~~condition ofhas ~~incorporation~~been and ~~amended~~will ~~and~~continue ~~restated~~to ~~bylaws of US Airways Group may have~~be ~~the~~affected ~~effect~~by ofmany ~~delaying~~changing oreconomic ~~preventing~~and ~~changes~~other inconditions ~~control~~beyond if our ~~board of directors determines that such changes in~~ control, ~~are not in the best interests of US Airways Group and its stockholders. These provisions include~~including, among ~~other things, the following~~others:

• aactual ~~classified~~or ~~board~~potential ofchanges ~~directors~~in ~~with~~international, ~~three-year~~national, ~~staggered~~regional, ~~terms~~and local economic, business and financial conditions, including recession, inflation, higher interest rates, wars, terrorist attacks, or political instability;

• ~~advance~~changes ~~notice~~in ~~procedures~~consumer ~~for~~preferences, ~~stockholder~~perceptions, ~~proposals~~spending topatterns, beor ~~considered~~demographic ~~at stockholders’ meetings~~trends;

• changes in the ~~ability~~competitive ofenvironment USdue ~~Airways~~to ~~Group’s~~industry ~~board~~consolidation, ofchanges ~~directors~~in toairline ~~fill~~alliance ~~vacancies~~affiliations, onand ~~the~~other ~~board~~factors;

• actual or potential disruptions to the ATC systems, including as a ~~prohibition~~result ~~against~~of ~~stockholders~~“sequestration” ~~taking~~or ~~action~~any byother ~~written~~interruption ~~consent~~in government funding;

• aincreases ~~prohibition~~in ~~against~~costs ~~stockholders~~of ~~calling~~safety, ~~special~~security, ~~meetings~~and ofenvironmental ~~stockholders~~measures;

• aoutbreaks ~~requirement that holders~~ of atdiseases ~~least~~that ~~80%~~affect oftravel ~~the voting power of the shares entitled to vote in the election of directors approve any amendment of our amended and restated bylaws submitted to stockholders for approval~~behavior; and

• ~~super-majority~~weather ~~voting requirements to modify or amend specified provisions of US Airways Group’s amended~~ and ~~restated~~natural ~~certificate of incorporation~~disasters.

33In particular, an outbreak of a contagious disease such as Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, or any other influenza-type illness, if it were to persist for an extended period, could materially affect the airline industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than revenues in the second and third quarters of the year.

~~Table~~A higher than normal number of ~~Contents~~pilot retirements and a potential shortage of pilots could adversely affect us.

~~These~~We ~~provisions~~currently have ~~are~~a ~~not~~higher ~~intended~~than tonormal ~~prevent~~number aof ~~takeover,~~pilots ~~but~~eligible ~~are~~for ~~intended~~retirement. toAmong ~~protect~~other ~~and maximize~~things, the ~~value~~extension of USpilot ~~Airways~~careers ~~Group’s~~facilitated ~~stockholders’~~by ~~interests.~~the ~~While~~FAA’s ~~these~~2007 ~~provisions~~modification ~~have~~of the ~~effect~~mandatory ofretirement ~~encouraging~~age ~~persons~~from ~~seeking~~age to60 ~~acquire control of our company~~ to ~~negotiate~~age ~~with~~65 ~~our~~has ~~board~~now ofbeen ~~directors~~fully implemented, ~~they~~resulting ~~could~~in ~~enable~~large ~~our~~numbers ~~board~~ of ~~directors~~pilots toin ~~prevent~~the aindustry ~~transaction~~approaching ~~that~~the ~~some,~~revised ormandatory aretirement ~~majority,~~age. ofIf ~~our~~pilot ~~stockholders~~retirements ~~might~~were ~~believe~~ to beexceed innormal ~~their~~levels ~~best interests and,~~ in ~~that~~the ~~case~~future, it may ~~prevent~~adversely oraffect ~~discourage~~us. ~~attempts~~The toFAA ~~remove~~also ~~and~~recently ~~replace~~issued ~~incumbent directors. In addition, US Airways~~regulations ~~Group~~that isincrease ~~subject to~~ the ~~provisions~~flight ofexperience ~~Section 203~~required offor ~~the~~pilots ~~Delaware~~working ~~General~~for ~~Corporation~~airlines ~~Law,~~certificated ~~which~~under ~~prohibits~~Part ~~business~~121 ~~combinations~~of ~~with~~the ~~interested~~Federal ~~stockholders~~Aviation Regulations. ~~Interested~~These ~~stockholders~~and doother ~~not~~factors ~~include~~could ~~stockholders~~contribute ~~whose~~to ~~acquisition~~a ofshortage ~~US Airways Group’s securities is approved by the board~~ of ~~directors~~qualified ~~prior~~pilots, towhich ~~the~~could ~~investment~~adversely ~~under Section 203~~affect us.

~~Our charter~~Increases ~~documents~~in ~~include~~insurance ~~provisions~~costs ~~limiting~~or ~~voting~~reductions ~~and~~in ~~ownership~~insurance ofcoverage ~~our~~may ~~equity~~adversely ~~interests,~~impact ~~which includes~~ our ~~common~~operations ~~stock~~ and financial ~~our convertible notes, by foreign owners~~results.

~~Our~~The ~~charter~~terrorist ~~documents~~attacks ~~provide that, consistent with the requirements~~ of ~~Subtitle VII of Title~~September ~~49 of the United States Code~~11, ~~as amended,~~2001 orled ~~as the same may be from time~~ to ~~time amended (the “Aviation Act”), any person or entity who is not~~ a ~~“citizen~~significant ofincrease ~~the~~in ~~United~~insurance premiums ~~States” (as defined under the Aviation Act~~ and ~~administrative~~a ~~interpretations~~decrease ~~issued~~in by the ~~DOT,~~ ~~its~~insurance ~~predecessors~~coverage ~~and~~available ~~successors, from time~~ to ~~time),~~commercial ~~including~~air ~~any~~carriers. ~~agent~~Accordingly, ~~trustee~~our orinsurance ~~representative~~costs ofincreased ~~such person or entity (a “non-citizen”)~~significantly, ~~shall not own (beneficially or of record)~~ and~~/or~~ ~~control more than (a) 24.9% of the aggregate votes of all of~~ our ~~outstanding~~ability ~~equity~~to ~~securities~~continue ~~(as~~to ~~defined,~~obtain ~~which~~insurance ~~definition~~even ~~includes~~at ~~our~~current ~~capital~~prices ~~stock,~~remains ~~securities~~uncertain. ~~convertible~~In ~~into or exchangeable for shares of our capital stock~~addition, ~~including our outstanding convertible notes, and any~~ ~~options,~~we ~~warrants~~have orobtained ~~other~~third-party ~~rights~~war torisk ~~acquire capital stock)~~ (~~the “voting cap amount”~~terrorism) orinsurance ~~(b) 49.9%~~through ofa ~~our~~special ~~outstanding~~program ~~equity~~administered ~~securities~~by (the ~~“absolute~~FAA, ~~cap~~resulting ~~amount”).~~in Iflower ~~non-citizens~~premiums ~~nonetheless at any time own and/or control more~~ than ~~the~~if ~~voting~~we ~~cap~~had ~~amount,~~obtained ~~the~~this ~~voting~~insurance ~~rights of the equity securities~~ in ~~excess of~~ the ~~voting~~commercial ~~cap~~insurance ~~amount~~market. ~~shall~~The beprogram ~~automatically~~has ~~suspended~~been inextended, ~~accordance~~ with the ~~provisions~~same ofconditions ~~our~~and ~~bylaws. Voting rights of equity securities~~premiums, ifuntil ~~any~~September 30, ~~owned (beneficially~~2014. orIf ~~of record) by non-citizens shall be suspended in reverse chronological order based upon~~ the ~~date~~federal ofinsurance ~~registration~~program ~~in the foreign stock record. Further~~terminates, ifwe atwould ~~any~~likely ~~time~~face a ~~transfer~~material ofincrease ~~equity securities to a non-citizen would result~~ in ~~non-citizens~~ ~~owning more than~~ the ~~absolute~~cost ~~cap~~of ~~amount,~~war ~~such~~risk ~~transfer~~insurance. ~~shall~~The befailure ~~void and~~ of noone ~~effect,~~or inmore ~~accordance with provisions~~ of our ~~bylaws.~~insurers ~~Certificates~~could ~~for~~result ~~our equity securities must bear a legend set forth~~ in ~~our amended and restated~~a ~~certificate~~lack of ~~incorporation~~coverage ~~stating~~for ~~that~~a ~~such~~period ~~equity securities are subject to the foregoing restrictions. Under our bylaws, it is the duty~~ of ~~each stockholder who is a non-citizen to register his, her or its equity securities on our foreign stock record~~time. ~~In addition~~Additionally, ~~our~~severe ~~bylaws~~disruptions ~~provide that~~ in the ~~event~~domestic ~~that~~and ~~non-citizens~~global ~~shall~~financial ~~own~~markets ~~(beneficially~~could oradversely ofimpact ~~record) or have voting control over any equity securities,~~ the ~~voting~~claims ~~rights~~paying ofability ~~such persons shall be subject to automatic suspension to the extent required to ensure that we are in compliance with applicable provisions~~ of ~~law~~some ~~and regulations relating to ownership or control of a United States air carrier~~insurers. InFuture ~~the~~downgrades ~~event~~in ~~that we determine that~~ the ~~equity~~ratings ~~securities~~of ~~registered~~enough oninsurers ~~the~~could ~~foreign~~adversely ~~stock~~impact ~~record~~both or the ~~stock~~availability ~~records~~ of ~~the~~appropriate ~~Company~~insurance ~~exceed~~coverage ~~the absolute cap amount, sufficient shares shall be removed from the foreign stock record~~ and ~~the~~its ~~stock~~cost. ~~records~~Because of ~~the~~competitive ~~Company~~pressures soin ~~that~~our ~~the~~industry, ~~number~~our ofability ~~shares~~to ~~entered~~pass ~~therein~~additional ~~does~~insurance ~~not exceed~~costs ~~the~~to ~~absolute~~passengers ~~cap~~is ~~amount~~limited. ~~Shares~~As ofa ~~equity~~result, ~~securities~~further ~~shall~~increases bein insurance ~~removed~~costs ~~from~~or ~~the~~reductions ~~foreign~~in ~~stock~~available ~~record~~insurance ~~and~~coverage ~~the~~could ~~stock~~have ~~records~~an ofadverse ~~the~~impact ~~Company in reverse chronological order based~~ on ~~the~~our ~~date~~financial ~~of registration in the foreign stock record and the stock records of the Company~~results.

~~Item 1B.~~33 ~~Unresolved Staff Comments~~

None.Table of Contents

34Several lawsuits were filed in connection with the Merger and remain pending, and these lawsuits could have a material adverse impact on our business.

~~Table~~US Airways Group, as well as the members of ~~Contents~~US Airways Group’s board of directors, were named as defendants in a lawsuit brought by a purported class of US Airways Group’s stockholders challenging the Merger and seeking a declaration that the Merger Agreement is unenforceable, an injunction against the Merger (or rescission in the event it has been consummated), imposition of a constructive trust, an award of fees and costs, including attorneys’ and experts’ fees, and other relief. US Airways Group, US Airways, AMR and American were also named as defendants in a private antitrust lawsuit. The complaint alleges that the effect of the Merger may be to substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Antitrust Act. The relief sought in the complaint includes an injunction against the Merger, or divestiture. In January 2014, the complaint was amended to add a claim for money damages and to request injunctive relief requiring the carriers to hold separate their assets. Such private lawsuits could result in an obligation to pay damages or terms, conditions, requirements, limitations, costs or restrictions that would impose additional material costs on or materially limit our revenues, or materially limit some of the synergies and other benefits we anticipate following the Merger. See Part I, Item 3, Legal Proceedings – “Merger Class Action.”

~~Item 2.~~Our ~~Properties~~ability to utilize our NOL carryforwards may be limited.

~~Flight~~Under ~~Equipment~~the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), a corporation is generally allowed a deduction in any taxable year for NOLs carried over from prior taxable years (“NOL Carryforwards”). As of December 31, 2013, we had available NOL Carryforwards of approximately $1.6 billion for regular federal income tax purposes which will expire, if unused, beginning in 2028, and approximately $674 million for state income tax purposes which will expire, if unused, between 2014 and 2033. The amount of NOL Carryforwards for state income tax purposes that will expire, if unused, in 2014 is $3 million. Our NOL Carryforwards are subject to adjustment on audit by the Internal Revenue Service and the respective state taxing authorities.

~~At December 31,~~A ~~2012,~~corporation’s weability ~~operated~~to adeduct ~~mainline~~its ~~fleet~~federal ofNOL ~~340~~Carryforwards ~~aircraft.~~and ~~During~~to ~~2012,~~utilize wecertain ~~took~~other ~~delivery~~available oftax 12attributes ~~new~~can be ~~A321~~substantially ~~aircraft~~constrained ~~from~~under ~~Airbus~~the ~~and~~general ~~three~~annual ~~ERJ~~limitation ~~190~~rules ~~aircraft~~of ~~that~~Section 382 ~~were~~of ~~purchased~~the ~~from~~Internal ~~Republic.~~Revenue ~~During~~Code ~~2012,~~(Section we382) ~~removed~~if ~~seven~~it ~~leased~~undergoes ~~Boeing~~an ~~737-300~~“ownership change” as defined in Section 382 (generally where cumulative stock ~~aircraft~~ownership ~~and~~changes ~~eight~~among ~~leased~~material ~~Boeing~~shareholders ~~737-400~~exceed ~~aircraft~~50 ~~from~~percent ~~our~~during ~~mainline~~a ~~operating~~rolling ~~fleet~~three-year period). We ~~are~~experienced ~~also~~an ~~supported~~ownership bychange ~~our~~in ~~regional~~connection ~~airline~~with ~~subsidiaries~~the ~~and~~Merger; ~~affiliates~~however, ~~operating~~our asability USto ~~Airways~~utilize ~~Express~~our ~~under~~NOL ~~capacity~~Carryforwards ~~purchase~~is ~~agreements,~~not ~~which~~anticipated ~~operated~~to ~~238~~be ~~regional~~effectively ~~jets~~constrained ~~and~~as 44result ~~turboprops~~of atsuch ~~December 31,~~ownership ~~2012~~change. ~~Our~~Similar ~~prorate~~limitations ~~carriers~~may ~~operated~~apply ~~four~~for ~~regional~~state ~~jets~~income attax ~~December 31, 2012~~purposes.

USNotwithstanding ~~Airways~~the ~~has~~foregoing, ~~definitive~~a ~~purchase~~future ~~agreements~~ownership ~~with~~change ~~Airbus~~may ~~for~~severely limit or effectively eliminate our ability to utilize our NOL Carryforwards and other tax attributes. To reduce the ~~acquisition~~risk of ~~134~~a ~~aircraft,~~potential ~~including~~adverse 97effect ~~single-aisle~~on ~~A320~~our ~~family~~ability ~~aircraft~~to utilize our NOL Carryforwards, the Amended and 37Restated ~~widebody~~Certificate ~~aircraft~~of ~~(comprised~~Incorporation of 22AAG ~~A350~~contains ~~XWB~~transfer ~~aircraft~~restrictions applicable ~~and~~to 15certain ~~A330-200~~substantial ~~aircraft)~~shareholders. ~~Since~~Although ~~2008,~~the ~~when~~purpose ~~deliveries~~of ~~commenced~~these ~~under~~transfer ~~the~~restrictions ~~purchase~~is ~~agreements~~to prevent an ownership change from occurring, weno ~~have~~assurance ~~taken~~can ~~delivery~~be ofgiven 58that ~~aircraft~~such ~~through~~an ~~December 31~~ownership change will not occur, ~~2012~~in which ~~includes~~case ~~four~~our ~~A320~~ability ~~aircraft,~~to 47utilize our ~~A321~~NOL ~~aircraft~~Carryforwards and ~~seven~~other ~~A330-200~~tax ~~aircraft~~attributes could be severely limited or effectively eliminated.

USOur ~~Airways~~ability ~~plans~~ to ~~take~~use our ~~delivery~~NOL ofCarryforwards 16also ~~A321~~will ~~aircraft~~depend inon ~~2013, with~~ the ~~remaining~~amount 30of ~~A320~~taxable ~~family~~income ~~aircraft~~generated ~~scheduled~~in tofuture ~~be delivered between 2014 and 2015~~periods. InOur ~~addition,~~NOL USCarryforwards ~~Airways~~are ~~plans~~available to ~~take~~be ~~delivery of five A330-200 aircraft in 2013~~utilized, ~~with~~subject to the ~~remaining~~possible ~~three~~limitations ~~A330-200~~noted ~~aircraft~~above, ~~scheduled~~by toother bemembers ~~delivered in 2014. Deliveries~~ of the 22Company. ~~A350~~The ~~XWB aircraft are scheduled to~~NOL ~~begin~~Carryforwards inmay ~~2017~~expire ~~and~~before ~~extend~~we ~~through~~(or ~~2019.~~other USmembers ~~Airways~~of ~~has~~the ~~financing~~Company) ~~commitments~~can ~~for~~generate ~~all~~sufficient ~~future~~taxable ~~Airbus~~income ~~aircraft~~to ~~deliveries~~use ~~except for four aircraft scheduled for delivery after November 2013~~them.

The application of the acquisition method of accounting resulted in us recording a significant amount of goodwill, which amount is tested for impairment at least annually. In addition, we ~~have~~may ~~two~~never ~~ERJ~~realize ~~190~~the ~~aircraft~~full tovalue beof ~~purchased~~their ~~from~~respective ~~Republic~~intangible ~~scheduled~~assets ~~for~~or ~~delivery~~long-lived inassets, ~~the~~causing ~~first~~them ~~quarter~~to ofrecord ~~2013~~material impairment charges.

AsIn ofaccordance ~~December 31,~~with ~~2012~~applicable acquisition accounting rules, we recorded goodwill on our ~~mainline~~consolidated ~~operating~~balance ~~fleet~~sheet ~~consisted~~to the extent the acquisition purchase price exceeded the net fair value of our tangible and intangible assets and liabilities as of the ~~following~~acquisition ~~aircraft:~~date. Goodwill is not amortized, but is tested for impairment at least annually. Also, in accordance with applicable accounting standards, we will be required to test their respective indefinite-lived intangible assets for impairment on an annual basis, or more frequently if conditions indicate that an impairment may have occurred. In addition, we are required to test certain of their other assets for impairment if conditions indicate that an impairment may have occurred.

Aircraft Type	Average SeatCapacity		Owned/Mortgaged(1)		Leased(2)		Total		AverageAge (years)
A330-300		291		4		5		9		12.3
A330-200		258		4		3		7		3.2
A321		184		56		19		75		5.6
A320		150		11		61		72		13.9
A319		124		3		90		93		12.2
B767-200ER		204		—		10		10		23.4
B757-200		181		4		20		24		19.5
B737-400		144		—		32		32		22.6
ERJ 190		99		18		—		18		5.2
Total		157		100		240		340		12.4

(1)Table Allof owned aircraft are pledged as collateral for various secured financing agreements.Contents

Future impairment of goodwill or other assets could be recorded in results of operations as a result of changes in assumptions, estimates, or circumstances, some of which are beyond our control. Factors which could result in an impairment could include, but are not limited to: (2i) reduced passenger demand as a result of domestic or global economic conditions; (ii) higher prices for jet fuel; (iii) lower fares or passenger yields as a result of increased competition or lower demand; (iv) a significant increase in future capital expenditure commitments; and (v) significant disruptions to our operations as a result of both internal and external events such as terrorist activities, actual or threatened war, labor actions by employees, or further industry regulation. There can be no assurance that a material impairment charge of goodwill or tangible or intangible assets will be avoided. The ~~terms~~value of ~~the~~our ~~leases~~aircraft ~~expire~~could ~~between~~be ~~2013~~impacted in future periods by changes in supply and ~~2024~~demand for these aircraft. Such changes in supply and demand for certain aircraft types could result from grounding of aircraft by us or other airlines. An impairment charge could have a material adverse effect on our business, results of operations and financial condition.

AsItem of1B. ~~December 31,~~Unresolved ~~2012,~~Staff ~~our wholly owned regional airline subsidiaries operated the following regional jet and turboprop aircraft:~~ Comments

Aircraft Type	Average SeatCapacity		Owned		Leased(1)		Total		AverageAge (years)
CRJ-700		70		7		7		14		8.3
CRJ-200		50		12		23		35		8.8
De Havilland Dash 8-300		50		—		11		11		21.3
De Havilland Dash 8-100		37		33		—		33		23.4
Total		48		52		41		93		15.4

None.

~~(1)~~35 ~~The terms of the leases expire between 2017 and 2022.~~

WeTable maintain inventories of spare engines, spare parts, accessories and other maintenance supplies sufficient to support our operating requirements. Contents

35Item 2. Properties

~~Table~~Flight ofEquipment ~~Contents~~

~~The~~At December 31, ~~following~~2013, ~~table~~we ~~illustrates~~operated a mainline fleet of 343 aircraft. During 2013, we took delivery of 16 new A321 aircraft and five new A330 aircraft from Airbus as well as two ERJ 190 aircraft that were purchased from Republic. During 2013, we removed 18 leased Boeing 737-400 aircraft and two leased A320 aircraft from our ~~committed~~mainline ~~orders~~operating fleet. We are also supported by our regional airline subsidiaries and ~~scheduled~~third-party ~~lease~~regional ~~expirations~~carriers atoperating as US Airways Express under capacity purchase agreements, which operated 238 regional jets and 40 turboprops at December 31, ~~2012:~~2013. We also had four regional jets operating under prorate agreements at December 31, 2013.

	2013		2014		2015		2016		2017		Thereafter
Firm orders remaining		21		21		12		—		8		14
Scheduled mainline lease expirations		34		33		23		5		20		125
Scheduled wholly owned express subsidiaries lease expirations		—		—		—		—		3		38

US Airways has definitive purchase agreements with Airbus for the acquisition of 134 aircraft, including 97 single-aisle A320 family aircraft and 37 widebody aircraft (comprised of 22 A350 XWB aircraft and 15 A330-200 aircraft). Since 2008, when deliveries commenced under the purchase agreements, we have taken delivery of 79 aircraft through December 31, 2013 which includes four A320 aircraft, 63 A321 aircraft and 12 A330-200 aircraft.

~~See~~US ~~Notes~~Airways 8plans ~~and~~to 7,take ~~“Commitments~~delivery ~~and~~of ~~Contingencies”~~17 A321 aircraft in ~~Part II~~2014, ~~Items 8A~~with ~~and~~the 8Bremaining 13 A320 family aircraft scheduled to be delivered in 2015. In addition, ~~respectively,~~ ~~for~~US ~~additional~~Airways ~~information~~plans onto take delivery of three A330-200 aircraft ~~purchase~~in 2014. Deliveries of the 22 A350 XWB aircraft are scheduled to begin in 2017 and extend through 2019. US Airways has financing commitments for all future Airbus aircraft deliveries.

~~Ground~~As ~~Facilities~~of December 31, 2013, our mainline operating fleet consisted of the following aircraft:

At each airport where we conduct flight operations, we lease passenger, operations and baggage handling space, generally from the airport operator, but in some cases on a subleased basis from other airlines. Our main operational facilities are associated with our hubs and focus city, which are located at the following airports: Charlotte Douglas International, Philadelphia International, Phoenix Sky Harbor International and Washington National. At those locations and in other cities we serve, we maintain administrative offices, terminal, catering, cargo, training facilities, maintenance facilities and other facilities, in each case as necessary to support our operations in the particular city. Our Operations Control Center is located near Pittsburgh, Pennsylvania, in a facility leased from the Allegheny County Airport Authority.


Aircraft Type	Average Seat Capacity		Owned/ Mortgaged(1)		Leased(2)		Total		Average Age (years)
A330-300		291		4		5		9		13.3
A330-200		258		9		3		12		2.6
A321		187		72		19		91		5.6
A320		150		11		59		70		14.6
A319		124		3		90		93		13.2
B767-200ER		204		—		10		10		24.4
B757-200		181		4		20		24		20.5
B737-400		144		—		14		14		23.8
ERJ 190		99		20		—		20		6.1

Total		161		123		220		343		12.0

~~Our~~(1) ~~corporate~~Most ~~headquarters~~owned ~~building~~aircraft isare ~~located~~pledged inas ~~Tempe,~~collateral ~~Arizona,~~for ~~and we have satellite facilities housing~~ various ~~headquarter~~secured ~~support functions~~financing ~~in the surrounding metropolitan area~~agreements. ~~The leases on these office facilities have expiration dates ranging from 2014 to 2024.~~

~~Terminal~~(2) ~~Construction~~The ~~Projects~~terms of the leases expire between 2014 and 2024.

WeAs ~~use~~of ~~public airports for our flight operations under lease agreements with the government entities that own or control these airports. From time to time~~December 31, ~~airports undertake projects to improve or construct new facilities~~2013, ~~which~~our ~~are~~wholly ~~typically~~owned ~~funded~~regional ~~through~~airline ~~proceeds~~subsidiaries ~~from~~operated ~~special or general purpose bond offerings made by~~ the ~~respective~~following ~~airport~~regional ~~governmental~~jet ~~entity. Our airport lease~~ and ~~operating agreements typically provide that any costs for~~turboprop ~~these~~aircraft: new or improved airport facilities are passed through to us in the form of higher occupancy costs based on our relative percentage of occupancy at the airport. In certain circumstances, we agree to manage these airport projects.

In 2010, the airlines and the City of Philadelphia approved a project to make certain improvements to the Terminal F facilities at the Philadelphia International Airport, which will be funded with proceeds from the issuance of General Airport Revenue Bonds issued by the City of Philadelphia. We have agreed to manage this project that commenced in 2011, which is expected to be complete by 2016 and cost approximately $130 million.


Aircraft Type	Average Seat Capacity		Owned		Leased(1)		Total		Average Age (years)
CRJ-700		70		7		7		14		9.3
CRJ-200		50		12		23		35		9.8
De Havilland Dash 8-300		50		—		11		11		22.3
De Havilland Dash 8-100		37		29		—		29		24.0

Total		49		48		41		89		15.9

36(1) The terms of the leases expire between 2017 and 2022.

~~Table~~We maintain inventories of ~~Contents~~spare engines, spare parts, accessories and other maintenance supplies sufficient to support our operating requirements.

~~Item 3.~~36 ~~Legal Proceedings~~

WeTable are party to an arbitration proceeding relating to a grievance brought by our pilots union to the effect that, retroactive to January 1, 2010, this work group was entitled to a significant increase in wages by operation of the applicable collective bargaining agreement. The arbitrator has issued two decisions in our favor, and a subsequent meeting requested by the union has been held with the arbitrator to address those decisions. We believe that the union’s position is without merit and that the possibility of an adverse outcome is remote. Contents

On April 21, 2011, US Airways filed an antitrust lawsuit against Sabre Holdings Corporation, Sabre Inc. and Sabre Travel International Limited (collectively, “Sabre”) in Federal District Court for the Southern District of New York. The ~~lawsuit~~following ~~alleges,~~table ~~among~~illustrates ~~other~~our ~~things,~~committed ~~that~~orders Sabre has engaged in anticompetitive practices that illegally restrain US Airways’ ability to distribute its products to its customers. The lawsuit also alleges that these actions have prevented US Airways from employing new competing technologies and ~~have~~scheduled ~~allowed Sabre to continue to charge US Airways~~lease ~~supracompetitive~~expirations ~~fees.~~at The lawsuit seeks both injunctive relief and money damages. Sabre filed a motion to dismiss the case, which the court denied in part and granted in part in September 2011, allowing two of the four counts in the complaint to proceed. On JanuaryDecember 1831, 2013,: Sabre filed a motion for leave to file a counterclaim, alleging that US Airways and other airlines conspired among themselves and with a third-party technology firm to boycott Sabre and other global distribution systems. If permitted to proceed, Sabre would be seeking monetary damages and injunctive relief. We intend to pursue our claims against Sabre vigorously and to vigorously defend any claims Sabre is permitted to file against us, but there can be no assurance of the outcome of this litigation.

We are defendants in various other pending lawsuits and proceedings, and from time to time are subject to other claims arising in the normal course of our business, many of which are covered in whole or in part by insurance. The outcome of those matters cannot be predicted with certainty at this time, but we, having consulted with outside counsel, believe that the ultimate disposition of these contingencies will not materially affect our consolidated financial position or results of operations.


	2014		2015		2016		2017		2018		Thereafter
Firm orders remaining		20		13		—		6		10		6
Scheduled mainline lease expirations		34		27		5		26		11		117
Scheduled wholly owned regional subsidiaries lease expirations		—		—		—		3		3		35

~~Item~~See Notes 10 and 9, “Commitments and Contingencies” in Part 4.II, Items 8A ~~Mine~~and ~~Safety~~8B, ~~Disclosures~~respectively, for additional information on aircraft purchase commitments.

~~Not applicable.~~Ground Facilities

37At each airport where we conduct flight operations, we lease passenger, operations and baggage handling space, generally from the airport operator, but in some cases on a subleased basis from other airlines. Our main operational facilities are associated with our hubs and focus city, which are located at the following airports: Charlotte Douglas International, Philadelphia International, Phoenix Sky Harbor International and Washington National. At those locations and in other cities we serve, we maintain administrative offices, terminal, catering, cargo, training facilities, maintenance facilities and other facilities, in each case as necessary to support our operations in the particular city. US Airways’ Operations Control Center is located near Pittsburgh, Pennsylvania, in a facility leased from the Allegheny County Airport Authority.

~~Table~~US ofAirways’ ~~Contents~~corporate office building is located in Tempe, Arizona, and we have satellite facilities housing various support functions in the surrounding metropolitan area. The leases on these office facilities have expiration dates ranging from 2014 to 2024.

~~PART II~~Terminal Construction Projects

~~Item 5.~~We ~~Market~~use public airports for USour ~~Airways~~flight ~~Group’s~~operations ~~Common~~under ~~Equity~~lease or use agreements with the municipalities or governmental agencies that own or control them and lease certain other ground equipment for use at such facilities. From time to time, ~~Related~~airports ~~Stockholder~~undertake ~~Matters~~projects to improve or construct new facilities, which are typically funded through proceeds from special or general purpose bond offerings made by the respective airport governmental entity. Our airport lease and ~~Issuer~~operating ~~Purchases~~agreements typically provide that any costs for these new or improved airport facilities are passed through to us in the form of ~~Equity~~higher ~~Securities~~occupancy costs based on our relative percentage of occupancy at the airport. In certain circumstances, we agree to manage these airport projects.

~~Stock~~In ~~Exchange~~2010, ~~Listing~~a project was approved to make certain improvements to the Terminal F facilities at the Philadelphia International Airport, which will be funded with proceeds from the issuance of General Airport Revenue Bonds issued by the City of Philadelphia. We have agreed to manage this project that commenced in 2011, which is expected to be complete by 2017 and cost approximately $130 million.

~~Our~~37 common stock trades on the NYSE under the symbol “LCC.” As of February 15, 2013, the closing price of our common stock on the NYSE was $14.50. As of February 15, 2013, there were 1,662 holders of record of our common stock.

MarketTable Prices of Common Stock Contents

~~The~~Item ~~following~~3. ~~table~~Legal ~~sets forth, for the periods indicated, the high and low sale prices of our common stock on the NYSE:~~ Proceedings

Year Ended December 31	Period	High		Low
2012	Fourth Quarter	$	13.75	$	10.32
	Third Quarter		14.51		9.74
	Second Quarter		13.80		7.41
	First Quarter		9.91		4.97
2011	Fourth Quarter	$	6.48	$	3.96
	Third Quarter		9.15		4.68
	Second Quarter		10.35		7.76
	First Quarter		11.56		7.71

Government Antitrust Actions. On August 13, 2013, the U.S. government along with the States of Arizona, Florida, Tennessee and Texas, the Commonwealths of Pennsylvania and Virginia, and the District of Columbia (collectively, the “plaintiff states”), filed a complaint against US Airways Group and AMR in the U.S. District Court for the District of Columbia. The plaintiffs alleged, among other things, that the proposed Merger would substantially lessen competition in violation of Section 7 of the Clayton Act and sought to permanently enjoin the transaction. On September 5, 2013, the plaintiffs filed an amended complaint, adding the State of Michigan as a plaintiff. On October 1, 2013, the State of Texas entered into an agreement with US Airways Group and AMR that resolved that state’s objections to the Merger, and its claims were dismissed with prejudice on October 7, 2013. On November 11, 2013, US Airways and American entered into agreements with the U.S. government and the plaintiff states resolving all claims in the litigation. The agreement with the U.S. government requires our carriers to divest assets at certain airports and remains subject to public comment and court approval. In the agreement with the United States government, among other things, US Airways and American agreed to divest and not reacquire for 10 years certain rights and assets consisting of 52 slot pairs at Washington National and 17 slot pairs at LaGuardia, in each case together with associated gates and related ground facilities necessary to operate those slot pairs, and two gates at each of Boston Logan International Airport, Chicago O’Hare International Airport, DAL, Los Angeles International Airport and Miami International Airport. The agreement with the plaintiff states, which was entered by the court on November 12, 2013, requires our airlines, subject to certain conditions and exceptions, to maintain certain hub operations in a manner generally consistent with historical operations and to continue to provide scheduled daily service to certain specified communities, both for limited periods of time. In addition, US Airways and American entered into a related settlement with the DOT related to small community service from Washington National.

Merger Class Action. On March 1, 2013, a complaint captioned Plumbers & Steamfitters Local Union No. 248 Pension Fund v. US Airways Group, ~~has~~Inc., ~~not~~et ~~declared~~al., orNo. ~~paid~~CV2013-051605, ~~cash~~was orfiled ~~other~~as ~~dividends~~a putative class action on ~~its~~behalf ~~common~~of ~~stock~~the ~~since~~stockholders ~~1990~~of ~~and currently~~US ~~does~~Airways ~~not~~Group ~~intend~~in tothe doSuperior ~~so.~~Court ~~Under~~for ~~the~~Maricopa ~~provisions~~County, ofArizona. ~~certain~~On ~~debt~~July 3, ~~agreements~~2013, ~~including~~an amended ~~our~~complaint, ~~secured~~captioned ~~loans~~Dennis Palkon, ~~our~~et ~~ability~~al. tov. ~~pay~~US ~~dividends~~Airways onGroup, orInc., ~~repurchase~~et ~~our~~al., ~~common~~No. ~~stock~~CV2013-051605, iswas ~~restricted~~filed with the same court. ~~Any~~The ~~future~~amended ~~determination~~complaint tonames ~~pay~~as ~~cash~~defendants ~~dividends~~US ~~will~~Airways beGroup at and the ~~discretion~~members of ~~our~~its board of directors, ~~subject~~and alleges that the directors failed to ~~applicable~~maximize ~~limitations~~the ~~under~~value ~~Delaware~~of ~~law,~~US Airways Group in connection with the Merger and ~~will~~that ~~depend~~US ~~upon~~Airways ~~our~~Group ~~results~~aided and abetted those breaches of ~~operations,~~fiduciary ~~financial~~duty. ~~condition~~The relief sought in the amended complaint includes an injunction against the Merger, ~~contractual~~or ~~restrictions~~rescission ~~and~~in ~~other~~the ~~factors~~event ~~deemed~~it ~~relevant~~has bybeen consummated. The court in the above-referenced action denied the plaintiff’s motion for a temporary restraining order that had sought to enjoin our ~~board~~Annual Meeting of Stockholders. The ~~directors~~above-referenced action was stayed pending the outcome of the antitrust lawsuit filed by the U.S. government and various states on August 13, 2013 (described above). This stay has now been lifted and a motion to dismiss this action filed by US Airways Group is pending before the court. We believe this lawsuit is without merit and intend to vigorously defend against the allegations.

~~Foreign~~Private ~~Ownership~~Party ~~Restrictions~~Antitrust Action. On July 2, 2013, a lawsuit captioned Carolyn Fjord, et al., v. US Airways Group, Inc., et al., was filed in the United States District Court for the Northern District of California. The complaint names as defendants US Airways Group and US Airways, and alleges that the effect of the Merger may be to substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Antitrust Act. The relief sought in the complaint includes an injunction against the Merger, or divestiture. On August 6, 2013, the plaintiffs re-filed their complaint in the Bankruptcy Court, adding AMR and American as defendants, and on October 2, 2013, dismissed the initial California action. The Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On January 10, 2014, the Plaintiffs moved to amend their complaint to add a claim for money damages and to request injunctive relief requiring the carriers to hold separate their assets. Trial is set for June 2014. We believe this lawsuit is without merit and intend to vigorously defend against the allegations.

~~Under~~US ~~current~~Airways ~~federal~~Sabre ~~law~~Matter. On April 21, ~~non-U~~2011, US Airways filed an antitrust lawsuit against Sabre Holdings Corporation, Sabre Inc.~~S. citizens~~ ~~cannot~~and ~~own~~Sabre orTravel ~~control~~International ~~more~~Limited ~~than~~(collectively, ~~25%~~“Sabre”) ofin ~~the~~Federal ~~outstanding~~District ~~voting~~Court ~~securities~~for ofthe aSouthern ~~domestic~~District ~~air~~of ~~carrier~~New York. WeThe lawsuit ~~believe~~alleges, among other things, that weSabre ~~were~~has engaged in ~~compliance~~anticompetitive ~~with~~practices ~~this~~that illegally restrain US Airways’ ability to distribute its products to its customers. The lawsuit also alleges that these actions have prevented US ~~statute~~Airways ~~during~~from employing new competing technologies and have allowed Sabre to continue to charge US Airways supracompetitive fees. The lawsuit seeks both injunctive relief and money damages. Sabre filed a motion to dismiss the ~~time~~case, ~~period~~which ~~covered~~the bycourt denied ~~this~~in ~~report~~part and granted in part in September 2011, allowing two of the four counts in the complaint to proceed. US Airways intends to pursue our claims against Sabre vigorously, but there can be no assurance of the outcome of this litigation.

~~Stock~~General. ~~Performance~~We ~~Graph~~and our subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend against each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain.

~~The~~38 following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.

TheTable following stock performance graph compares our cumulative total shareholder return on an annual basis on our common stock with the cumulative total return on the Standard and Poor’s 500 Stock Index and the AMEX Airline Index from December 31, 2007 through December 31, 2012. The comparison assumes $100 was invested on December 31, 2007 in US Airways Group common stock and in each of the foregoing indices and assumes reinvestment of dividends. The stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price performance. Contents

38Item 4. Mine Safety Disclosures

~~Table~~Not ofapplicable. ~~Contents~~

	12/31/2007		12/31/2008		12/31/2009		12/31/2010		12/31/2011		12/31/2012
US Airways Group, Inc.	$	100	$	53	$	33	$	68	$	34	$	92
Amex Airline Index		100		71		99		137		95		129
S&P 500		100		62		76		86		86		97

39Table of Contents

~~Table~~PART II ~~of Contents~~

~~Selected~~Stock ~~Consolidated~~Exchange ~~Financial~~Listing ~~Data of US Airways Group~~

~~The~~Upon ~~selected consolidated financial data presented below under~~ the ~~captions~~closing ~~“Consolidated statements~~ of ~~operations data” and “Consolidated balance sheet data” for~~ the ~~years~~Merger ~~ended~~ on December 319, ~~2012~~2013, ~~2011 and 2010 and as of December 31, 2012 and 2011 are derived from~~ US Airways Group’s ~~audited~~became ~~consolidated~~a ~~financial~~wholly ~~statements~~owned ~~included~~subsidiary ~~elsewhere~~of inAmerican ~~this~~Airlines Group ~~report~~Inc. ~~The~~As ~~selected~~a ~~consolidated~~result, ~~financial~~the ~~data~~common ~~for~~stock ~~the years~~of ~~ended~~US ~~December 31,~~Airways ~~2009~~Group ~~and~~is ~~2008~~no ~~and~~longer aslisted ofon ~~December 31,~~the ~~2010~~NYSE, ~~2009~~ and ~~2008~~there ~~are~~is ~~derived~~no ~~from~~trading USmarket ~~Airways~~for ~~Group’s~~such ~~audited~~shares. ~~consolidated~~There ~~financial~~is ~~statements~~no ~~not~~trading ~~included~~market infor ~~this~~the ~~report.~~common ~~The~~stock ~~selected~~of ~~consolidated~~US ~~financial~~Airways, ~~data should~~which beis ~~read~~a inwholly ~~conjunction~~owned ~~with~~subsidiary USof US Airways Group’s. ~~consolidated~~US ~~financial~~Airways ~~statements~~Group ~~for~~has ~~the~~not ~~respective~~declared ~~periods,~~or ~~the~~paid ~~related~~cash ~~notes~~or ~~and~~other ~~the~~dividends ~~related~~on ~~reports~~its ofcommon ~~KPMG~~stock ~~LLP,~~since ~~an independent registered public accounting firm~~1990.

	Year Ended December 31,
	2012		2011		2010		2009			2008
	(In millions, except share and per share data)
Consolidated statements of operations data:
Operating revenues	$	13,831	$	13,055	$	11,908	$	10,458		$	12,118
Operating expenses		12,975		12,629		11,127		10,340			13,918
Operating income (loss)		856		426		781		118			(1,800	)
Net income (loss)		637		71		502		(205	)		(2,215	)
Earnings (loss) per common share:
Basic	$	3.92	$	0.44	$	3.11	$	(1.54	)	$	(22.11	)
Diluted		3.28		0.44		2.61		(1.54	)		(22.11	)
Shares used for computation (in thousands):
Basic		162,331		162,028		161,412		133,000			100,168
Diluted		203,978		163,743		201,131		133,000			100,168
Consolidated balance sheet data (at end of period):
Total assets	$	9,396	$	8,335	$	7,819	$	7,454		$	7,214
Long-term obligations, less current maturities (a)		5,013		4,718		4,559		4,643			4,281
Total stockholders’ equity (deficit)		790		150		84		(355	)		(494	)
Consolidated statements of operations data excluding special items (b):
Operating income (loss) excluding special items	$	893	$	452	$	785	$	(199	)	$	(606	)
Net income (loss) excluding special items		537		111		447		(499	)		(808	)
Earnings (loss) per common share excluding special items:
Basic	$	3.31	$	0.69	$	2.77	$	(3.75	)	$	(8.06	)
Diluted		2.79		0.68		2.34		(3.75	)		(8.06	)

As of December 6, 2013, the last trading day of the common stock of US Airways Group, the closing price of our common stock on the NYSE was $22.55. As of December 6, 2013, there were 1,630 holders of record of our common stock.

~~(a)~~Market ~~Includes~~Prices ~~debt,~~of ~~capital~~Common ~~leases,~~Stock ~~postretirement benefits other than pensions and employee benefit liabilities and other.~~

~~(b)~~The ~~See~~following ~~reconciliation~~table sets forth, for the periods indicated, the high and low sale prices of ~~GAAP~~our tocommon ~~non-GAAP~~stock ~~financial~~on ~~measures~~the ~~below.~~NYSE:


Year Ended December 8	Period	High		Low
2013	October 1, 2013 – December 6, 2013	$	25.49	$	18.98
	Third Quarter		19.59		15.28
	Second Quarter		19.70		15.03
	First Quarter		17.43		12.70

2012	Fourth Quarter	$	13.75	$	10.32
	Third Quarter		14.51		9.74
	Second Quarter		13.80		7.41
	First Quarter		9.91		4.97

~~Table~~Stock ofPerformance ~~Contents~~Graph

~~Reconciliation~~The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of ~~GAAP~~1933 or the Exchange Act, each as amended, except to ~~Non-GAAP~~the ~~Financial~~extent ~~Measures~~that we specifically incorporate it by reference into such filing.

WeThe ~~are~~following ~~providing~~stock ~~disclosure~~performance ofgraph ~~the~~compares ~~reconciliation~~our cumulative oftotal ~~reported~~shareholder ~~non-GAAP~~return ~~financial~~on ~~measures~~an toannual ~~their~~basis ~~comparable~~on ~~financial~~our ~~measures~~common stock with the cumulative total return on athe ~~GAAP basis.~~Standard Weand ~~believe~~Poor’s ~~that~~500 Stock Index and the ~~non-GAAP~~AMEX ~~financial~~Airline ~~measures~~Index ~~provide~~from ~~investors~~December 31, 2008 through December 6, 2013 (the last ~~ability~~trading today ~~measure~~of ~~financial~~US ~~performance~~Airways ~~excluding~~Group ~~special~~common ~~items~~stock). The comparison assumes $100 was invested on December 31, ~~which~~2008 isin ~~more~~US ~~indicative~~Airways Group common stock and in each of ~~our~~the ~~ongoing~~foregoing indices and assumes reinvestment of dividends. The stock performance shown on the graph below represents historical stock performance and is ~~more~~not ~~comparable~~necessarily toindicative ~~measures~~of ~~reported~~future bystock ~~other major~~price ~~airlines~~performance.

	Year Ended December 31,
	2012			2011			2010			2009			2008
	(In millions)
Operating income (loss) – GAAP	$	856		$	426		$	781		$	118		$	(1,800	)
Operating special items, net (a)		37			26			4			(317	)		1,194
Operating income (loss) excluding special items		893			452			785			(199	)		(606	)
Net income (loss) – GAAP		637			71			502			(205	)		(2,215	)
Operating special items, net (a)		37			26			4			(317	)		1,194
Nonoperating special items, net (b)		(137	)		(7	)		(59	)		61			213
Income tax special items (c)		—			21			—			(38	)		—
Net income (loss) excluding special items	$	537		$	111		$	447		$	(499	)	$	(808	)

(a)Table Includesof the following operating special charges (credits):Contents

LOGO

The 2012 period included $34 million of charges primarily related to corporate transaction and auction rate securities arbitration costs as well as $3 million of express special charges related to ratification of a new Piedmont fleet and passenger services contract.


	12/31/2008		12/31/2009		12/31/2010		12/31/2011		12/31/2012		12/6/2013
US Airways Group, Inc.	$	100	$	63	$	129	$	66	$	175	$	292
Amex Airline Index		100		139		194		134		182		278
S&P 500		100		123		139		139		158		200

~~The~~41 ~~2011 period included $24 million of charges primarily related to corporate transaction and auction rate securities arbitration costs as well as $2 million in express other special charges.~~

TheTable 2010 period included a $6 million non-cash charge related to the decline in value of certain spare parts, $5 million in aircraft costs related to capacity reductions and other net special charges of $10 million, which included a settlement and corporate transaction costs. These costs were offset in part by a $16 million refund of ASIF and a $1 million refund of ASIF for our express subsidiaries previously paid to the TSA during the years 2005 to 2009. Contents

~~The~~Item 2009 period included $375 million of net unrealized gains on fuel hedging instruments, offset in part by $22 million in aircraft costs as a result of capacity reductions, $16 million in non-cash impairment charges due to the decline in value of certain indefinite lived intangible assets associated with international routes, $11 million in severance and other charges, $6. ~~million~~Selected inFinancial ~~costs incurred related to the 2009 liquidity improvement program and $3 million in non-cash charges related to the decline in value of certain express spare parts.~~ Data

~~The~~Selected ~~2008~~Consolidated ~~period~~Financial ~~included~~Data ~~a $622 million non-cash charge to write off all~~ of ~~the goodwill created by the merger of~~ US Airways Group and America West Holdings in September 2005, as well as $496 million of net unrealized losses on fuel hedging instruments. In addition, the 2008 period included $35 million of merger-related transition expenses, $18 million in non-cash charges related to the decline in value of certain spare parts associated with our Boeing 737 aircraft fleet and, as a result of capacity reductions, $14 million in aircraft costs and $9 million in severance charges.

~~(b)~~As ~~Includes~~a result of the ~~following~~application ~~nonoperating~~of ~~special~~acquisition ~~charges~~accounting ~~(credits)~~as of December 9, 2013, US Airways Group’s financial statements after December 9, 2013 are not comparable to its financial statements for any period prior to the Merger. References to “Successor” refer to US Airways Group on or after December 9, 2013, after giving effect to the application of acquisition accounting. References to “Predecessor” refer to US Airways Group prior to December 9, 2013. Certain prior period amounts have been reclassified between various financial statement line items to conform to the new AAG financial statement presentation. See Note 1 to the consolidated financial statements in Part II, Item 8A of this report for further information on the reclassifications. These reclassifications do not impact the historic net income and are comprised principally of the following items:

~~The~~• ~~2012~~Reclassifications ~~period~~between ~~primarily~~other ~~included~~operating aexpenses ~~$142 million gain related to the slot transaction with Delta, offset in part by $3 million in debt prepayment penalties~~ and ~~non-cash~~operating ~~write~~revenues ~~offs of certain debt issuance costs related~~ to conform the ~~refinancing~~presentation of ~~two~~frequent ~~Airbus~~flyer ~~aircraft~~revenues.

~~The~~• ~~2011~~Reclassifications ~~period~~between ~~included~~various aoperating ~~$15~~expense ~~million~~line ~~credit~~items in connection with an award received in an arbitration involving investments in auction rate securities, offset in part by $6 million in debt prepayment penalties and non-cash write offs of certain debt issuance costs related to conform the ~~refinancing~~presentation of ~~five~~regional ~~Airbus aircraft~~airline ~~as well as $2 million of losses related to investments in auction rate securities~~expenses.

41• Reclassifications between other nonoperating expense, net and operating expenses to conform the presentation.

~~Table~~The selected consolidated financial data presented below under the captions “Consolidated statements of ~~Contents~~operations data” and “Consolidated balance sheet data” for the period from January 1 to December 8, 2013, the period from December 9 to December 31, 2013, the years ended December 31, 2012 and 2011 and as of December 31, 2013 and 2012 are derived from US Airways Group’s audited consolidated financial statements included elsewhere in this report. The selected consolidated financial data for the years ended December 31, 2010 and 2009 and as of December 31, 2011, 2010 and 2009 are derived from US Airways Group’s audited consolidated financial statements not included in this report. The selected consolidated financial data should be read in conjunction with US Airways Group’s consolidated financial statements for the respective periods, the related notes and the related reports of KPMG LLP, an independent registered public accounting firm.

The 2010 period included $53 million of net realized gains related to the sale of certain investments in auction rate securities as well as an $11 million settlement gain, offset in part by $5 million in non-cash charges related to the write off of debt issuance costs.


	Successor			Predecessor
	Period from December 9 to December 31,			Period from January 1 to December 8,		Year Ended December 31,
(In millions, except share and per share data)	2013			2013		2012		2011		2010		2009

Consolidated statements of operations data:
Operating revenues	$	931		$	13,676	$	13,765	$	12,987	$	11,849	$	10,446
Operating expenses		1,108			12,496		12,915		12,569		11,075		10,388

Operating income (loss)		(177	)		1,180		850		418		774		58
Net income (loss)		(208	)		600		637		71		502		(205	)
Earnings (loss) per common share:
Basic			(c)	$	3.30	$	3.92	$	0.44	$	3.11	$	(1.54	)
Diluted			(c)		2.94		3.28		0.44		2.61		(1.54	)
Shares used for computation (in thousands):
Basic			(c)		181,660		162,331		162,028		161,412		133,000
Diluted			(c)		208,276		203,978		163,743		201,131		133,000

Consolidated balance sheet data (at end of period):
Total assets	$	16,556				$	9,396	$	8,335	$	7,819	$	7,454
Long-term obligations, less current maturities (a)		6,818					5,013		4,718		4,559		4,643
Total stockholders’ equity (deficit)		4,406					790		150		84		(355	)

Consolidated statements of operations data excluding special items (b):
Operating income (loss) excluding special items	$	100		$	1,306	$	887	$	444	$	778	$	(259	)
Net income (loss) excluding special items		82			704		537		111		447		(499	)
Earnings (loss) per common share excluding special items:
Basic			(c)	$	3.88	$	3.31	$	0.69	$	2.77	$	(3.75	)
Diluted			(c)		3.44		2.79		0.68		2.34		(3.75	)

~~The~~(a) ~~2009~~Includes ~~period~~debt, ~~included~~capital ~~$49~~leases, ~~million~~pensions ~~in non-cash charges associated with the sale of 10 Embraer 190 aircraft~~ and ~~write~~postretirement ~~off~~benefits ~~of related debt discount~~ and ~~issuance costs, $10 million in~~ other~~-than-temporary~~ ~~non-cash impairment charges for investments in auction rate securities and a $2 million non-cash asset impairment charge~~liabilities.

~~The~~42 2008 period included $214 million in other-than-temporary non-cash impairment charges for investments in auction rate securities as well as $7 million in write offs of debt discount and debt issuance costs in connection with the refinancing of certain aircraft equipment notes and certain loan prepayments, offset in part by $8 million in gains on forgiveness of debt.

(c)Table Includesof the following income tax special charges (credits):Contents

~~The~~(b) ~~2011~~See ~~period~~reconciliation ~~included~~of aGAAP to non-~~cash~~GAAP ~~tax~~financial ~~charge~~measures of $21 million as a result of the sale of our final remaining investment in auction rate securities in July 2011. This charge recognized in the statement of operations the tax provision that was recorded in other comprehensive income, a subset of stockholders’ equity, in the fourth quarter of 2009 as described below.

(c) The ~~2009~~earnings period included a tax benefit of $38 million. Of this amount, $21 million was due to a non-cash income tax benefit related to gains recorded within other comprehensive income during 2009. In addition, we recorded a $14 million tax benefit related to a legislation change allowing us to carry back 100% of 2008 Alternative Minimum Tax liability (~~“AMT”~~loss) ~~net~~per ~~operating~~common ~~losses,~~share ~~resulting~~and inrelated ~~the~~shares ~~recovery~~used offor ~~AMT~~computation ~~amounts~~are ~~paid~~not inapplicable ~~prior years.~~for ~~We also recognized a $3 million tax benefit related to~~ the ~~reversal~~2013 ofSuccessor ~~the~~Period ~~deferred~~as ~~tax~~we ~~liability~~did ~~associated~~not ~~with~~have ~~the~~any ~~indefinite~~outstanding ~~lived~~publicly-traded ~~intangible~~equity ~~assets~~securities ~~that~~for ~~were~~this ~~impaired during 2009~~period.

~~Selected~~Reconciliation ~~Consolidated~~of ~~Financial~~GAAP ~~Data~~to ofNon-GAAP USFinancial ~~Airways~~Measures

~~The~~We ~~selected consolidated~~are ~~financial~~providing ~~data~~disclosure ~~presented below under the captions “Consolidated statements~~ of ~~operations data” and “Consolidated balance sheet data” for~~ the ~~years~~reconciliation ~~ended December 31, 2012, 2011 and 2010 and as~~ of ~~December 31,~~ ~~2012~~reported ~~and~~non-GAAP ~~2011~~financial ~~are~~measures ~~derived~~to ~~from~~their UScomparable ~~Airways’ audited consolidated~~ financial measures ~~statements~~on ~~included~~a ~~elsewhere~~GAAP ~~in this report~~basis. ~~The~~We ~~selected~~believe ~~consolidated~~that ~~financial data for~~ the ~~years~~non-GAAP ~~ended December 31, 2009 and 2008 and as of December 31, 2010, 2009 and 2008 are derived from US Airways’ audited consolidated~~ financial ~~statements~~measures ~~not~~provide ~~included~~investors inthe ~~this~~ability ~~report.~~to ~~The~~measure ~~selected consolidated~~ financial ~~data~~performance ~~should~~excluding bespecial ~~read~~items, inwhich ~~conjunction~~is ~~with~~more USindicative ~~Airways’~~of ~~consolidated financial~~our ~~statements~~ongoing ~~for~~performance ~~the respective periods, the related notes~~ and ~~the~~is ~~related~~more ~~reports~~comparable ofto ~~KPMG~~measures reported ~~LLP,~~by another ~~independent~~major ~~registered public accounting firm~~airlines.

	Year Ended December 31,
	Successor			Predecessor
	2012			2011			2010			2009			2008
	Period fromDecember 9 toDecember 31,			Period fromJanuary 1 toDecember 8,			Year Ended December 31,
(In millions)	~~(In millions)~~2013			2013			2012			2011			2010			2009
Consolidated statements of operations data:
Operating income (loss) – GAAP	$	(177	)	$	1,180		$	850		$	418		$	774		$	58
Operating revenues	$	13,992		$	13,208		$	12,055		$	10,609		$	12,244
Operating special items, net (a)		277			126			37			26			4			(317	)
Operating expenses		13,170			12,774			11,274			10,487			14,017
Operating income (loss) excluding special items		100			1,306			887			444			778			(259	)
Operating income (loss)		822			434			781			122			(1,773	)
Net income (loss) – GAAP		(208	)		600			637			71			502			(205	)
Net income (loss)		702			180			599			(140	)		(2,148	)
Operating special items, net (a)		277			126			37			26			4			(317	)
Consolidated balance sheet data (at end of period):
Nonoperating special items, net (b)		13			7			(137	)		(7	)		(59	)		61
Total assets	$	9,184		$	8,116		$	7,565		$	7,123		$	6,954
Income tax special items (c)		—			—			—			21			—			(38	)
Long-term obligations, less current maturities (a)		3,551			3,248			3,130			3,266			2,867
Net tax effect of special items		—			(29	)		—			—			—			—
Total stockholder’s equity (deficit)		1,655			962			780			255			(221	)
Net income (loss) excluding special items	$	82		$	704		$	537		$	111		$	447		$	(499	)

(a) Includes ~~debt,~~the ~~capital~~following ~~leases,~~operating ~~postretirement~~special ~~benefits~~charges ~~other than pensions and employee benefit liabilities and other.~~(credits):

42The 2013 Successor Period included $192 million of charges due to the pilot memorandum of understanding that became effective upon Merger close, $72 million of charges primarily due to merger related professional fees and fees to exit the Star Alliance and our codeshare agreement with United Airlines, and $13 million in charges for severance and special merger equity awards. The 2013 Predecessor Period included $138 million of charges primarily due to merger related professional fees, offset in part by a $12 million regional special credit due to a favorable arbitration ruling related to a vendor contract.

~~Table~~The 2012 period included $34 million of ~~Contents~~charges primarily due to merger related costs and auction rate securities arbitration costs as well as $3 million of regional special charges related to ratification of a new Piedmont fleet and passenger services contract.

~~Item 7.~~The ~~Management’s~~2011 ~~Discussion~~period ~~and~~included ~~Analysis~~$24 million of ~~Financial~~charges ~~Condition~~ primarily related to the slot transaction with Delta and ~~Results~~auction ofrate securities ~~Operations~~arbitration costs as well as $2 million in regional other special charges.

~~Background~~The 2010 period included a $6 million non-cash charge related to the decline in value of certain spare parts, $5 million in aircraft costs related to capacity reductions and other net special charges of $10 million, which included a settlement and corporate transaction costs. These costs were offset in part by a $16 million refund of ASIF and a $1 million refund of ASIF for our regional subsidiaries previously paid to the TSA during the years 2005 to 2009.

USThe ~~Airways~~2009 ~~Group~~period isincluded a$375 ~~holding~~million ~~company~~of ~~whose~~net ~~primary~~unrealized ~~business~~gains ~~activity~~on isfuel ~~the~~hedging ~~operation~~instruments, ofoffset ain ~~major~~part ~~network~~by ~~air~~$22 ~~carrier~~million ~~through~~in aircraft ~~its~~costs ~~wholly~~as ~~owned~~a ~~subsidiaries~~result USof ~~Airways,~~capacity ~~Piedmont~~reductions, ~~PSA,~~$16 ~~MSC~~million ~~and~~in ~~AAL. Effective~~non-cash ~~upon~~impairment UScharges ~~Airways~~due ~~Group’s~~to ~~emergence~~the ~~from~~decline ~~bankruptcy~~in onvalue ~~September 27,~~of ~~2005,~~certain USindefinite-lived ~~Airways~~intangible ~~Group~~assets ~~merged~~associated with ~~America~~international ~~West~~routes, ~~Holdings~~$11 million in severance and other charges, $6 ~~with~~million USin ~~Airways~~costs ~~Group~~incurred asrelated to the ~~surviving~~2009 ~~corporation~~liquidity improvement program and $3 million in non-cash charges related to the decline in value of certain regional spare parts.

We43 operate the fifth largest airline in the United States as measured by domestic RPMs and ASMs. We have hubs in Charlotte, Philadelphia and Phoenix and a focus city in Washington, D.C. at Ronald Reagan Washington National Airport. We offer scheduled passenger service on more than 3,000 flights daily to 198 communities in the United States, Canada, Mexico, Europe, the Middle East, the Caribbean, and Central and South America. We also have an established East Coast route network, including the US Airways Shuttle service. We had approximately 54 million passengers boarding our mainline flights in 2012. As of December 31, 2012, we operated 340 mainline jets and are supported by our regional airline subsidiaries and affiliates operating as US Airways Express under capacity purchase agreements, which operated 238 regional jets and 44 turboprops. Our prorate carriers operated four regional jets at December 31, 2012.

2012Table Yearof in Review Contents

~~The~~(b) ~~U.S.~~Includes ~~Airline~~the ~~Industry~~following nonoperating special charges (credits):

~~Even~~The ~~against~~2013 Successor Period included a ~~backdrop~~non-cash mark to market fair value adjustment for 7.25% convertible senior notes that are convertible into shares of ~~uncertain~~AAG ~~economic~~Common ~~conditions~~Stock subsequent to the Merger. The 2013 Predecessor Period included $37 million in charges primarily related to non-cash write offs of debt discount and ~~high~~debt ~~fuel~~issuance ~~prices,~~costs ~~most~~in connection with conversions of 7.25% convertible senior notes and repayment of the Uformer Citicorp North America term loan.S. ~~industry~~These ~~experienced~~charges were offset in part by a ~~profitable~~$30 ~~2012~~million ~~as consumer~~credit ~~demand~~in ~~remained~~connection ~~strong~~with an award received in an arbitration related to previous investments in auction rate securities.

InThe ~~its~~2012 ~~most~~period ~~recent~~primarily ~~data~~included ~~available,~~a ~~Airlines~~$142 ~~for~~million ~~America,~~gain related to the ~~trade~~slot ~~association~~transaction ~~for~~with ~~U.S. airlines~~Delta, ~~reported~~offset in ~~that~~part ~~annual~~by ~~U.S. industry passenger revenues and yields increased~~ $3~~.8%~~ ~~and~~million ~~3.2%, respectively, as compared to 2011. Year-over-year growth rates were lower than experienced~~ in ~~2011~~debt ~~due~~prepayment ~~primarily~~penalties toand ~~more difficult year~~non-~~over-year comparisons.~~cash ~~With~~write ~~respect~~offs toof ~~international~~certain ~~versus~~debt ~~domestic~~issuance ~~revenue~~costs ~~performance,~~related ~~Airlines for America reported domestic markets outperformed international markets, which experienced weaker demand due~~ to the ~~economic~~refinancing ~~uncertainty~~of intwo ~~Europe~~Airbus ~~during 2012~~aircraft.

~~Throughout~~The ~~2012,~~2011 ~~jet~~period ~~fuel~~included ~~prices~~a ~~followed~~$15 ~~the~~million ~~price~~credit ofin ~~Brent~~connection ~~crude~~with ~~oil~~an ~~more~~award ~~closely~~received ~~than~~in ~~the~~an ~~price~~arbitration ofrelated ~~West~~to ~~Texas~~investments ~~Intermediate~~in ~~crude~~auction ~~oil.~~rate ~~On average~~securities, ~~fuel~~offset ~~costs were up slightly~~ in ~~2012~~part asby ~~compared to 2011. The Brent crude oil average daily spot price was~~ $~~112~~6 ~~per~~million ~~barrel~~in ~~during~~debt ~~2012~~prepayment aspenalties ~~compared~~and tonon-cash ~~$111~~write inoffs ~~2011.~~of ~~However,~~certain ondebt aissuance ~~daily~~costs ~~basis,~~related ~~prices continued~~ to bethe ~~volatile. Throughout~~refinancing ~~2012,~~of ~~daily~~five ~~spot~~Airbus ~~prices~~aircraft ~~fluctuated~~as ~~between~~well aas ~~high of~~ $~~128~~2 ~~per~~million ~~barrel~~of inlosses ~~March~~related to ainvestments ~~low of $89 per barrel~~ in auction ~~June~~rate ~~and closed the year at $111 per barrel on December 31, 2012~~securities.

~~While~~The ~~the~~2010 ~~U.S.~~period ~~airline~~included ~~industry~~$53 ismillion ~~currently~~of ~~benefiting~~net ~~from~~realized agains ~~favorable~~related ~~revenue~~to ~~environment~~the ~~and~~sale ~~moderating~~of ~~fuel price increases as~~certain ~~described~~investments ~~above,~~in ~~uncertainty~~auction ~~exists~~rate ~~regarding~~securities ~~the~~as ~~economic~~well ~~conditions~~as ~~driving~~an ~~these~~$11 ~~factors.~~million ~~See~~settlement ~~Part I~~gain, ~~Item 1A,~~offset ~~Risk Factors – “Downturns~~ in ~~economic~~part ~~conditions~~by ~~adversely~~$5 ~~affect~~million ~~our~~in ~~business”~~non-cash ~~and~~charges ~~“Our~~related ~~business~~to ~~is dependent on~~ the ~~price~~write ~~and~~off ~~availability~~ of ~~aircraft~~debt ~~fuel.~~issuance ~~Continued periods of high volatility in fuel~~ costs~~, increased fuel prices and significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity~~.”

43The 2009 period included $49 million in non-cash charges associated with the sale of 10 Embraer 190 aircraft and write off of related debt discount and issuance costs, $10 million in other-than-temporary non-cash impairment charges for investments in auction rate securities and a $2 million non-cash asset impairment charge.

~~Table~~(c) ofIncludes ~~Contents~~the following income tax special charges (credits):

USThe ~~Airways~~2011 ~~Group~~period included a non-cash tax charge of $21 million as a result of the sale of our final remaining investment in auction rate securities in July 2011. This charge recognized in the statement of operations the tax provision that was recorded in other comprehensive income, a subset of stockholders’ equity, in the fourth quarter of 2009 as described below.

~~For~~The ~~the~~2009 ~~year~~period ~~ending~~included ~~December 31~~a tax benefit of $38 million. Of this amount, ~~2012~~$21 million was due to a non-cash income tax benefit related to gains recorded within other comprehensive income during 2009. In addition, we ~~reported~~recorded ~~our~~a ~~largest~~$14 ~~annual~~million ~~net~~tax ~~profit~~benefit ~~and~~related ~~achieved~~to ~~our~~a ~~best~~legislation ~~operational~~change ~~performance~~allowing us to carry back 100% of 2008 Alternative Minimum Tax liability (“AMT”) NOLs, resulting in the ~~Company’s~~recovery ~~history~~of AMT amounts paid in prior years. We also recognized a $3 million tax benefit related to the reversal of the deferred tax liability associated with the indefinite-lived intangible assets that were impaired during 2009.

~~Driven~~A bynumber ~~strong year-over-year growth in revenues, we realized net income~~ of ~~$637~~factors ~~million~~render inUS ~~2012,~~Airways ~~which~~Group’s ~~represents~~historical aconsolidated ~~797%~~financial ~~increase over~~information ~~net~~not ~~income~~directly ofcomparable ~~$71~~to ~~million~~its infinancial ~~2011.~~information ~~Operating~~for ~~income~~prior ~~was~~or ~~$856~~future ~~million~~periods. asSee ~~compared~~Part toI, ~~$426 million in 2011~~Item 1A, anRisk ~~increase~~Factors of– ~~101%.~~“The ~~Our~~historical ~~2012~~consolidated ~~net~~financial ~~profit~~information ~~included~~contained ~~net~~in ~~special~~this ~~credits~~report ofis ~~$100~~not ~~million,~~directly ~~while~~comparable ~~2011~~to ~~included net special charges of $40 million.~~our ~~See~~financial ~~“Reconciliation~~information offor ~~GAAP~~prior toor ~~Non-GAAP~~future ~~Financial Measures~~periods,” ~~included in~~ Part II, Item 67 of– ~~this~~“Management’s ~~report~~Discussion ~~for~~and ~~more~~Analysis ~~information~~of onFinancial ~~net~~Condition ~~special~~and ~~items.~~Results Asof ~~described~~Operations” inand ~~more~~the ~~detail~~notes ~~below,~~to ~~these~~the ~~outstanding~~consolidated financial ~~results were coupled with~~ ~~record~~statements ~~annual~~included ~~operational~~at ~~results~~Part ~~in on-time performance~~II, ~~completion~~Item 8A ~~factor~~of ~~and~~this ~~baggage handling~~report.

~~For~~44 the fourth quarter, a period in which passenger demand has been historically low and our results were negatively impacted by an estimated $35 million due to Hurricane Sandy, we realized net income of $37 million, which represents a 106% increase over net income of $18 million in 2011. Operating income was $125 million, as compared to operating income of $108 million in 2011, an increase of 16%.

RevenueTable of Contents

~~Mainline and~~Selected ~~express~~Consolidated ~~passenger~~Financial ~~revenues~~Data increased $743 million, or 6.4%, as compared to 2011. The growth in revenues was driven by a 2.8% increase in revenue passenger miles and a 3.5% increase in yield, as total capacity increased 2.0% as compared to 2011. Our mainline and express passenger revenue per available seat mile (“PRASM”) was 13.92 cents in 2012, a 4.3% increase, as compared to 13.34 cents in 2011. Total revenue per available seat mile (“RASM”) was 15.64 cents in 2012, a 3.9% increase, as compared to 15.06 cents in 2011. Total revenues include our ancillary revenue initiatives, which generated $585 million in revenues in 2012, an increase of ~~$48~~US ~~million~~Airways ~~over 2011 principally related to our Choice Seats Program.~~

~~Fuel~~As a result of the application of acquisition accounting as of December 9, 2013, US Airways’ financial statements after December 9, 2013 are not comparable to its financial statements for any period prior to the Merger. References to “Successor” refer to US Airways on or after December 9, 2013, after giving effect to the application of acquisition accounting. References to “Predecessor” refer to US Airways prior to December 9, 2013. Certain prior period amounts have been reclassified between various financial statement line items to conform to the new AAG financial statement presentation. See Note 1 to the consolidated financial statements in Part II, Item 8B of this report for further information on the reclassifications. These reclassifications do not impact the historic net income and are comprised principally of the following items:

~~Mainline~~• ~~and~~Reclassifications ~~express~~between ~~fuel~~other ~~expense~~operating ~~increased~~expenses ~~$131 million to $4.59 billion in 2012, which was 2.9% higher than 2011, on a 0.9% increase in consumption. The average mainline~~ and ~~express~~operating ~~price~~revenues ~~per gallon of fuel was $3.17 in 2012 as compared~~ to anconform ~~average~~the ~~price~~presentation ~~per gallon~~ of ~~$3.11~~frequent inflyer ~~2011, an increase of 2~~revenues.~~0%. We have not entered into any transactions to hedge our fuel consumption.~~

~~Capacity~~• Reclassifications between various operating expense line items to conform the presentation of regional airline expenses.

~~Total~~• ~~system~~Reclassifications ~~capacity~~between ~~for~~other ~~2012~~nonoperating ~~increased~~expense, ~~2.0%~~net asand ~~compared to 2011. The increase in capacity was driven by our strong~~ operating ~~performance,~~expenses ~~which led~~ to ~~higher~~conform ~~completion~~the ~~factors, and our fleet replacement program~~presentation. ~~During 2012 we replaced 15 Boeing 737 aircraft with 12 larger gauge, more modern and fuel-efficient new Airbus A321 aircraft.~~

~~Cost~~The ~~Control~~selected consolidated financial data presented below under the captions “Consolidated statements of operations data” and “Consolidated balance sheet data” for the period from January 1 to December 8, 2013, the period from December 9 to December 31, 2013, the years ended December 31, 2012 and 2011 and as of December 31, 2013 and 2012 are derived from US Airways’ audited consolidated financial statements included elsewhere in this report. The selected consolidated financial data for the years ended December 31, 2010 and 2009 and as of December 31, 2011, 2010 and 2009 are derived from US Airways’ audited consolidated financial statements not included in this report. The selected consolidated financial data should be read in conjunction with US Airways’ consolidated financial statements for the respective periods, the related notes and the related reports of KPMG LLP, an independent registered public accounting firm.

We remain committed to maintaining a low cost structure, which we believe is necessary in an industry whose economic prospects are heavily dependent upon two variables we cannot control: the health of the economy and the price of fuel. Our mainline costs per available seat mile (“CASM”) excluding special items, fuel and profit sharing increased 0.04 cents, or 0.5%, from 8.35 cents in 2011 to 8.39 cents in 2012. This increase was primarily due to higher costs associated with other variable compensation programs driven by our record profitability and a 166% increase in the price of our common stock from $5.07 to $13.50 during 2012.


	Successor			Predecessor
	Period from December 9 to December 31,			Period from January 1 to December 8,		Year Ended December 31,
(In millions)	2013			2013		2012		2011		2010		2009

Consolidated statements of operations data:
Operating revenues	$	941		$	13,822	$	13,925	$	13,140	$	11,996	$	10,597
Operating expenses		1,115			12,650		13,110		12,714		11,222		10,535

Operating income (loss)		(174	)		1,172		815		426		774		62
Net income (loss)		(191	)		674		702		180		599		(140	)

Consolidated balance sheet data (at end of period):
Total assets	$	16,719				$	9,184	$	8,116	$	7,565	$	7,123
Long-term obligations, less current maturities (a)		6,262					3,551		3,248		3,130		3,266
Total stockholder’s equity		5,262					1,655		962		780		255

44(a) Includes debt, capital leases, pensions and postretirement benefits and other liabilities.

~~Table~~A number of ~~Contents~~factors render US Airways’ historical consolidated financial information not directly comparable to its financial information for prior or future periods. See Part I, Item 1A, Risk Factors – “The historical consolidated financial information contained in this report is not directly comparable to our financial information for prior or future periods,” Part II, Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to the consolidated financial statements included at Part II, Item 8B of this report.

~~The~~45 ~~following table details our mainline CASM for the years ended December 31, 2012 and 2011:~~

	2012			2011			PercentIncrease(Decrease)
	(In cents)
Mainline CASM excluding special items, fuel and profit sharing:
Total mainline CASM		13.22			13.09			1.1
Special items, net		(0.05	)		(0.03	)		38.3
Aircraft fuel and related taxes		(4.70	)		(4.68	)		0.4
Profit sharing		(0.08	)		(0.02	)		nm
Total mainline CASM excluding special items, fuel and profit sharing (1)		8.39			8.35			0.5

~~(1)~~Item We7. ~~believe~~Management’s ~~that~~Discussion ~~the presentation of mainline CASM excluding fuel is useful to investors as both the cost~~ and ~~availability~~Analysis of ~~fuel~~Financial ~~are~~Condition ~~subject to many economic~~ and ~~political~~Results ~~factors beyond our control, and excluding special items and profit sharing provides investors the ability to measure financial performance in a way that is more indicative~~ of our ongoing performance and is more comparable to measures reported by other major airlines. Management uses mainline CASM excluding special items, fuel and profit sharing to evaluate our operating performance. Amounts may not recalculate due to rounding.Operations

~~Customer~~Background ~~Service~~

WeUS Airways Group is a holding company whose primary business activity is the operation of a major network air carrier through its wholly owned subsidiaries US Airways, Piedmont, PSA, MSC and AAL. Since December 9, 2013, US Airways Group has been a wholly-owned subsidiary of American Airlines Group Inc. In connection with the Merger, we applied acquisition accounting as of December 9, 2013 and our statements of operations for the period from December 9 through December 31, 2013 reflect the related adjustments. As a result, the financial statements after December 9, 2013 are ~~committed~~not comparable to the ~~consistently~~financial ~~delivering~~statements ~~safe~~for any period prior to the Merger. In order to provide a more meaningful comparison to prior year results, ~~reliable~~the financial results and ~~convenient~~operating ~~service~~statistics of the 2013 Successor and Predecessor Periods have been combined for purposes of the Management’s Discussion and Analysis of Financial Condition below. In addition, certain prior period amounts have been reclassified between various financial statement line items to ~~our~~conform ~~customers~~to the new AAG financial statement presentation. See Note 1 to the consolidated financial statements in ~~every~~Part ~~aspect~~II, Item 8A of ~~our~~this ~~operation~~report for further information on the reclassifications.

~~During~~Prior ~~2012~~to the Merger, we ~~continued~~operated ~~our~~the ~~work~~fifth tolargest ~~enhance~~airline ~~our~~in ~~customers’~~the ~~experience.~~United AsStates ~~described~~as ~~above~~measured inby ~~our~~domestic ~~discussion~~RPMs ofand ASMs. We have ~~capacity~~hubs in Charlotte, wePhiladelphia, ~~are~~Phoenix ~~continuing~~and ~~our~~Washington, ~~fleet~~D.C. ~~replacement~~at ~~program~~Washington ~~and~~National. ~~replacing~~As ~~older~~of ~~aircraft~~December 31, ~~with~~2013, ~~larger~~we ~~more~~offered ~~modern~~scheduled ~~and~~passenger ~~fuel-efficient~~service ~~new~~on ~~Airbus~~more ~~aircraft.~~than ~~Additionally~~3,000 weflights ~~completed~~daily ~~the~~to ~~installation~~193 ofcommunities in the ~~Envoy~~United ~~Suite~~States, Canada, Mexico, Europe, the ~~airline’s~~Middle ~~fully~~East, ~~lie-flat business-class~~the ~~seats~~Caribbean, ~~with~~and anCentral ~~on-demand~~and ~~in-flight~~South ~~entertainment~~America. ~~system,~~We onalso ~~our~~have ~~fleet~~an ofestablished ~~wide-body~~East ~~Airbus~~Coast ~~A330-300~~route ~~aircraft~~network, ~~expanded~~including ~~our~~the ~~Wi-Fi~~US ~~internet~~Airways Shuttle service. toWe ~~more~~had ~~than~~approximately ~~80%~~57 million ofpassengers boarding our ~~domestic~~mainline ~~Embraer~~flights ~~and~~in 2013. ~~Airbus~~As ~~narrow~~of ~~body~~December 31, ~~fleet~~2013, ~~and~~we ~~launched~~operated ~~our PreferredAccess~~343 ~~program,~~mainline ~~which~~jets ~~gives~~and ~~our~~are ~~customers~~supported ~~priority~~by ~~check~~our inregional ~~and~~airline ~~boarding.~~subsidiaries Inand ~~2012,~~third-party weregional ~~also~~carriers ~~launched~~operating ~~DineFresh,~~as aUS ~~premium~~Airways ~~meal~~Express ~~option~~under ~~for~~capacity ~~customers~~purchase ~~flying~~agreements, inwhich ~~Economy~~operated ~~class~~238 regional tojets ~~Europe,~~and ~~the~~40 ~~Middle~~turboprops. ~~East~~We ~~and~~also ~~South~~had ~~America,~~four ~~and~~regional wejets ~~are~~operating ~~the~~under ~~only U.S.-based~~prorate ~~carrier~~agreements toat ~~offer~~December 31, ~~this service~~2013.

~~Outstanding~~Following ~~efforts~~the ~~from~~Merger, ~~our~~AAG ~~employees~~began ~~drove~~moving ~~record~~toward ~~operational~~operating ~~performance~~under inthe single brand name of “American Airlines” through ~~2012~~its mainline operations, American and US Airways. Until a single operating certificate is issued by the FAA and the operational integration is complete, American and US Airways will continue to operate as weseparate ~~achieved~~airlines. ~~our~~This ~~best~~process onis expected to take 18-~~time~~24 ~~performance~~months. Through its operating subsidiaries, ~~highest~~including ~~completion~~the ~~factor~~operating ~~and~~subsidiaries ~~lowest~~of ~~mishandled~~US ~~baggage~~Airways ~~ratio~~Group, AAG is the largest airline in ~~our~~the ~~Company’s~~world ~~history~~as measured by RPMs and ASMs. ~~During~~AAG ~~2012~~has weprimary ~~also~~hubs ~~earned~~in ~~three~~Charlotte, ~~first~~Chicago, ~~place~~Dallas/Fort ~~monthly~~Worth, Los ~~rankings~~Angeles, ~~for~~Miami, ~~on-time~~New ~~performance~~York ~~and~~City, ~~three~~Philadelphia, ~~first place~~Phoenix ~~monthly~~and ~~rankings~~Washington, ~~for~~D.C. ~~baggage~~As ~~handling~~of ~~among~~December 31, 2013, the ~~big~~combined ~~hub~~airline, together with its third-~~and-spoke~~party regional carriers, asoperated ~~reported~~nearly 6,700 daily flights to 339 destinations in 54 countries. As of December 31, 2013, American and US Airways operated 965 mainline jets. US Airways continues to be provided with regional feed by ~~the~~Piedmont, ~~DOT~~PSA ~~Air~~and ~~Travel~~third-party ~~Consumer~~regional ~~Report~~carriers.

We2013 ~~reported~~Year ~~the~~in ~~following~~Review ~~operating statistics to the DOT for mainline operations for the years ended December 31, 2012 and 2011:~~

	2012		2011		Better(Worse)
On-time performance (a)		85.9		79.8		6.1	pts
Completion factor (b)		99.0		98.4		0.6	pts
Mishandled baggage (c)		2.14		2.70		20.7	%
Customer complaints (d)		1.74		1.92		9.4	%

The U.S. Airline Industry

~~(a)~~In ~~Percentage~~2013, ofthe ~~reported~~U.S. ~~flight~~airline ~~operations~~industry ~~arriving~~experienced onyear-over-year ~~time~~growth asin ~~defined~~passenger revenues driven by ~~the~~strong ~~DOT~~demand for air travel.

~~(b)~~In ~~Percentage~~its ofmost ~~scheduled~~recent ~~flight~~data ~~operations~~available, ~~completed~~Airlines for America, the trade association for U.S. airlines, reported that annual U.S. industry passenger revenues and yields increased 3.8% and 2.0%, respectively, as compared to 2012. With respect to international versus domestic performance, Airlines for America reported that the Atlantic and Latin America markets outperformed domestic markets in year-over-year growth in passenger revenues while the Pacific market experienced year-over-year declines in passenger revenues.

~~(c)~~Throughout ~~Rate~~2013, jet fuel prices continued to follow the price of ~~mishandled~~Brent ~~baggage~~crude ~~reports~~oil more closely than the price of West Texas Intermediate crude oil. On average, fuel costs were down slightly in 2013 as compared to 2012. The Brent crude oil average daily spot price was $109 per 1barrel in 2013 which is slightly lower than the average daily spot price in 2012 of $112 per barrel. However,~~000~~ ~~passengers~~on a daily basis, prices continued to be volatile. Throughout 2013, daily spot prices fluctuated between a high of $119 per barrel in February to a low of $97 per barrel in April and closed the year at $110 per barrel on December 31, 2013.

~~(d)~~While ~~Rate~~the ofU.S. ~~customer~~airline ~~complaints~~industry ~~filed~~is ~~with~~currently benefiting from a favorable revenue environment and moderating fuel price increases as described above, uncertainty exists regarding the ~~DOT~~economic ~~per~~conditions ~~100~~driving these factors. See Part I,~~000~~ ~~enplanements~~Item 1A, Risk Factors – “Our business is dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity.”

4546

~~Liquidity~~US ~~Position~~Airways Group

AsIn 2013, we realized operating income of ~~December 31~~$1.0 billion and income before income taxes of $631 million. Net income for 2013 was $392 million which included a $239 million income tax provision. This compares to operating income of $850 million, income before income taxes and net income, each in the amount of $637 million. In 2012, utilization of NOLs reduced our ~~total~~net ~~cash~~deferred tax asset and in turn resulted in the release of our valuation allowance, ~~cash~~which ~~equivalents~~offset our federal tax provision dollar for dollar. In the second quarter of 2013, ~~investments~~our pre-tax income and NOL utilization resulted in ~~marketable~~the ~~securities~~use ~~and~~of ~~restricted~~our ~~cash~~remaining ~~was~~valuation allowance $2associated with federal income taxes.71 ~~billion~~Accordingly, ofwith ~~which~~no remaining federal valuation allowance to release, we recorded non-cash federal income tax expense in 2013. The year-over-year improvement in operating income was driven by growth in operating revenues of $~~336~~842 million ~~was~~resulting ~~restricted~~from strong demand for air travel.

	December 31,2012		December 31,2011
	(In millions)
Cash, cash equivalents and investments in marketable securities	$	2,376	$	1,947
Long-term restricted cash		336		365
Total cash, cash equivalents, investments in marketable securities and restricted cash	$	2,712	$	2,312

Our 2013 results also included net special charges of $394 million compared to $100 million of net special credits in 2012. Excluding the effects of net special items, we recognized income before income taxes of $1.05 billion and net income of $786 million in 2013. This compares to income before income taxes and net income, each in the amount of $537 million in 2012. See “US Airways Group’s Results of Operations” included in Part II, Item 7 of this report for more information on net special items.

~~The~~Revenue improvement in our liquidity in 2012 was due primarily to our record profitability resulting from the strong revenue environment. An April 2012 loan agreement, pursuant to which US Airways borrowed an aggregate principal amount of $100 million, also contributed to the improvement.

~~Long-term~~Mainline ~~restricted~~and ~~cash~~regional ~~primarily~~passenger ~~includes~~revenues ~~cash~~increased ~~collateral~~$731 million, or 5.9%, as compared to ~~secure~~2012. ~~workers’~~The ~~compensation~~growth ~~claims~~in revenues was driven by a 4.6% increase in revenue passenger miles and ~~credit~~a ~~card~~1.3% ~~processing holdback~~increase ~~requirements~~in ~~for~~yield, ~~advance~~as ~~ticket~~total ~~sales~~capacity ~~for~~increased ~~which~~3.6% USas ~~Airways~~compared ~~has~~to ~~not~~2012. ~~yet~~Our ~~provided~~mainline ~~air~~and ~~transportation~~regional passenger revenue per available seat mile (“PRASM”) was 14.22 cents in 2013, a 2.3% increase, as compared to 13.90 cents in 2012.

~~2013~~Fuel ~~Outlook~~

WeMainline ~~have~~and ~~taken~~regional ~~significant~~fuel ~~actions~~expense ~~over~~decreased ~~the~~$54 ~~last~~million ~~few years~~ to ~~align~~$4.53 ~~capacity~~billion ~~with~~in ~~demand~~2013, ~~focus~~which ~~our~~was ~~network~~1.2% lower than 2012, on ~~our~~a ~~four~~3.0% ~~key~~increase ~~markets,~~in ~~introduce~~consumption. ~~new~~The ~~ancillary~~average ~~revenue~~mainline ~~streams,~~and ~~control~~regional ~~costs~~price ~~and~~per ~~continue~~gallon ~~our~~of ~~exceptional~~fuel ~~operating~~was ~~reliability~~$3.04 ~~Although~~in it2013 isas ~~difficult~~compared to ~~predict~~an ~~the~~average price ofper ~~oil,~~gallon ~~the~~of ~~strength~~$3.17 ofin ~~the~~2012, ~~economy~~a ordecrease ~~the~~of ~~capacity~~4.1%. ~~actions~~We ofhave ~~other~~not ~~airlines,~~entered ~~we believe~~into ~~that~~any wetransactions ~~are~~to ~~positioned~~hedge ~~well~~our fuel consumption.

46Capacity

~~Table~~Total system capacity for 2013 increased 3.6% as compared to 2012. The increase in capacity was driven by our continued replacement of ~~Contents~~smaller legacy Boeing 737 aircraft with new larger gauge Airbus A321 aircraft and more international long haul flying.

USCost ~~Airways~~Control ~~Group’s Results of Operations~~

InWe ~~2012,~~remain wecommitted ~~realized~~to ~~operating~~maintaining ~~income~~a oflow ~~$856~~cost ~~million~~structure, ~~and~~which ~~income~~we ~~before~~believe ~~income~~is ~~taxes~~necessary ofin ~~$637~~an ~~million.~~industry Wewhose ~~experienced~~economic ~~growth in revenues in~~prospects ~~2012~~are ~~due~~heavily todependent aupon ~~strong~~two ~~pricing~~variables ~~environment~~we ~~resulting~~cannot ~~from~~control: ~~ongoing~~the ~~industry~~health ~~capacity~~of ~~discipline~~the economy and ~~consumer~~the ~~demand~~price ~~for~~of ~~air travel~~fuel. Our ~~2012~~mainline ~~results~~costs ~~were~~per ~~also~~available ~~impacted~~seat bymile ~~recognition~~(“CASM”) ofexcluding ~~$100~~special ~~million~~items, infuel ~~net~~and ~~special~~profit ~~credits~~sharing for 2013 was relatively flat as compared to 2012.

InThe ~~2011,~~following wetable ~~realized~~details ~~operating~~our ~~income~~mainline ofCASM ~~$426~~for ~~million and income before income taxes of $90 million. We experienced higher revenues in 2011 due to~~ the ~~strong~~years ~~pricing~~ended ~~environment~~December 31, ~~resulting~~2013 ~~from ongoing industry capacity discipline~~ and ~~robust consumer demand for air travel, which substantially offset a significant increase in fuel costs. Our 2011 results were also impacted by~~2012: ~~recognition of $19 million in net special charges.~~

In 2010, we realized operating income of $781 million and income before income taxes of $502 million. We experienced growth in revenues in 2010 driven by higher yields as a result of the improved economy and industry capacity discipline. Our 2010 results were also impacted by recognition of $55 million in net special credits.


	2013			2012			Percent Increase (Decrease)
	(In cents)
Mainline CASM excluding special items, fuel and profit sharing:
Total mainline CASM		13.31			12.93			2.9
Special items, net		(0.54	)		(0.05	)		nm
Aircraft fuel and related taxes		(4.50	)		(4.70	)		(4.3	)
Profit sharing		(0.16	)		(0.08	)		96.5

Total mainline CASM excluding special items, fuel and profit sharing ⁽¹⁾		8.12			8.10			0.1

~~The~~(1) ~~table~~We ~~below~~believe ~~presents~~that the presentation of mainline CASM excluding fuel is useful to investors as both the cost and availability of fuel are subject to many economic and political factors beyond our ~~pre-tax~~control, and the exclusion of special ~~charges~~items ~~(credits)~~and (profit sharing provides investors the ability to measure financial performance in ~~millions):~~a way that is more indicative of our ongoing performance and is more comparable to measures reported by other major airlines. Management uses mainline CASM excluding special items, fuel and profit sharing to evaluate our operating performance. Amounts may not recalculate due to rounding.

	Year Ended December 31,
	2012			2011			2010
Mainline operating special items, net (a)	$	34		$	24		$	5
Express operating special items, net		3			2			(1	)
Nonoperating special items, net (b)		(137	)		(7	)		(59	)
Total	$	(100	)	$	19		$	(55	)

(a)Table The 2012 and 2011 periods consisted primarily of corporate transaction and auction rate securities arbitration costs.Contents

~~The~~Customer ~~2010~~Service period consisted of a $6 million non-cash charge related to the decline in value of certain spare parts, $5 million in aircraft costs related to capacity reductions and other net special charges of $10 million, which included a settlement and corporate transaction costs. These costs were offset in part by a $16 million refund of Aviation Security Infrastructure Fee (“ASIF”) previously paid to the TSA during the years 2005 to 2009.

~~(b)~~We ~~The~~are ~~2012~~committed ~~period~~to ~~primarily~~consistently ~~consisted~~delivering ofsafe, areliable ~~$142~~and ~~million~~convenient ~~gain~~service ~~related~~ to ~~the~~our ~~slot~~customers ~~transaction with Delta, offset~~ in ~~part~~every byaspect $3of ~~million~~our operation. inOur ~~debt~~2013 ~~prepayment~~operating ~~penalties~~performance ~~and~~was ~~non-cash~~negatively ~~write~~impacted ~~offs~~by ofmore ~~certain~~severe ~~debt~~weather ~~issuance~~conditions ~~costs~~as ~~related~~compared to ~~the refinancing of two Airbus aircraft~~2012.

~~The~~We ~~2011 period~~reported ~~consisted~~the offollowing aoperating ~~$15~~statistics ~~million~~to ~~credit~~the inDOT ~~connection~~for ~~with~~mainline anoperations ~~award~~for ~~received~~the inyears anended ~~arbitration involving investments in auction rate securities~~December 31, ~~offset in part by $6 million in debt prepayment penalties~~ 2013 and ~~non-cash~~2012: ~~write offs of certain debt issuance costs as well as $2 million of losses related to investments in auction rate securities.~~

The 2010 period consisted of $53 million of net realized gains related to the sale of certain investments in auction rate securities as well as an $11 million settlement gain, offset in part by $5 million in non-cash charges related to the write off of debt issuance costs.


	2013		2012		Better (Worse)
On-time performance (a)		81.5		85.9		(4.4	) pts
Completion factor (b)		99.0		99.0		—	pts
Mishandled baggage (c)		2.52		2.14		(17.8	)%
Customer complaints (d)		1.42		1.74		18.4	%

At December 31, 2012, we had approximately $1.50 billion of gross NOLs to reduce future federal taxable income. To the extent profitable, all of our NOLs are expected to be available to reduce federal taxable income in the calendar year 2013. The NOLs expire during the years 2025 through 2031. Our net deferred tax assets, which include $1.42 billion of the NOLs, are subject to a full valuation allowance. At December 31, 2012, the federal and state valuation allowances were $118 million and $42 million, respectively, which includes $32 million allocated to certain capital loss carryforwards. In accordance with U.S. Generally Accepted Accounting Principles (~~“GAAP”~~a), ~~utilization~~Percentage of ~~the~~reported ~~NOLs~~flight ~~will~~operations ~~result~~arriving inon atime ~~corresponding~~as ~~decrease~~defined inby the ~~valuation allowance and offset our tax provision dollar for dollar~~DOT.

~~When~~(b) ~~profitable,~~Percentage ~~we are ordinarily subject to AMT. However as the result~~ of ascheduled ~~special~~flight ~~tax~~operations ~~election made in 2009, we were able to utilize AMT NOLs to fully offset our AMT taxable income for each of the years ended 2012, 2011 and 2010~~completed.

47(c) Rate of mishandled baggage reports per 1,000 passengers.

~~Table~~(d) Rate of ~~Contents~~customer complaints filed with the DOT per 100,000 enplanements.

~~For~~Liquidity ~~the~~Position year ended December 31, 2012, we recognized an AMT credit of $2 million resulting from our elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. In addition, we did not record federal income tax expense and recorded $2 million of state income tax expense related to certain states where NOLs were limited or unavailable to be used.

~~For~~As ~~the~~of ~~year ended~~ December 31, ~~2011,~~ we recorded a special non-cash tax charge of $21 million in connection with the sale of our final remaining investment in auction rate securities in July 2011. This charge recognized in the statement of operations the tax provision that was recorded in other comprehensive income2013, ~~a subset of stockholders’ equity, in the fourth quarter of 2009. In addition, we recognized an AMT credit of $2 million resulting from~~ our ~~elections~~total ~~under applicable sections of the Tax Relief~~cash, ~~Unemployment~~ ~~Insurance~~short-term ~~Reauthorization,~~investments and ~~Job~~restricted ~~Creation~~cash ~~Act~~was ~~of 2010~~$3.59 Webillion, ~~did not record any additional federal income tax expense and recorded a nominal amount~~ of ~~state~~which ~~income tax expense related to certain states where NOLs were limited or~~$333 ~~unavailable~~million towas ~~be used~~restricted.

For the year ended December 31, 2010, we did not record federal income tax expense and recorded a nominal amount of state income tax expense related to certain states where NOLs were limited or unavailable to be used.


	December 31, 2013		December 31, 2012
	(In millions)
Cash and short-term investments	$	3,252	$	2,376
Restricted cash		333		336

Total cash, short-term investments and restricted cash	$	3,585	$	2,712

48The improvement in our liquidity in 2013 was due in part to our operating profitability. Additionally, financing transactions have generated approximately $550 million of net proceeds. In the second quarter of 2013, we issued $500 million aggregate principal 6.125% Senior Notes. We also entered into a new $1.6 billion term loan, of which $1.3 billion of the net proceeds were used to repay our former Citicorp North America term loan and certain other higher cost secured debt. In July 2013, we repaid in full the Barclays prepaid miles loan at its face amount of $200 million.

~~Table~~Restricted ofcash ~~Contents~~primarily includes cash collateral to secure workers’ compensation claims and credit card processing holdback requirements for advance ticket sales for which US Airways has not yet provided air transportation.

~~The~~48 ~~table below sets forth our selected mainline and express operating data:~~

							Increase			Increase
	Year Ended December 31,						(Decrease)			(Decrease)
	2012		2011		2010		2012-2011			2011-2010
Mainline
Revenue passenger miles (millions) (a)		62,435		60,779		58,977		2.7	%		3.1	%
Available seat miles (millions) (b)		74,211		72,603		71,588		2.2	%		1.4	%
Passenger load factor (percent) (c)		84.1		83.7		82.4		0.4	pts		1.3	pts
Yield (cents) (d)		14.38		13.99		12.96		2.8	%		7.9	%
Passenger revenue per available seat mile (cents) (e)		12.10		11.71		10.68		3.3	%		9.6	%
Operating cost per available seat mile (cents) (f)		13.22		13.09		11.73		1.1	%		11.6	%
Passenger enplanements (thousands) (g)		54,277		52,959		51,853		2.5	%		2.1	%
Departures (thousands)		449		452		451		(0.5	)%		0.2	%
Aircraft at end of period		340		340		339		—	%		0.3	%
Block hours (thousands) (h)		1,209		1,217		1,199		(0.7	)%		1.6	%
Average stage length (miles) (i)		1,004		991		981		1.4	%		0.9	%
Average passenger journey (miles) (j)		1,704		1,691		1,674		0.8	%		1.0	%
Fuel consumption (gallons in millions)		1,102		1,095		1,073		0.6	%		2.0	%
Average aircraft fuel price including related taxes (dollars per gallon)		3.17		3.11		2.24		2.0	%		38.7	%
Full time equivalent employees at end of period		31,236		31,548		30,871		(1.0	)%		2.2	%
Express (k)
Revenue passenger miles (millions) (a)		10,883		10,542		10,616		3.2	%		(0.7	)%
Available seat miles (millions) (b)		14,214		14,070		14,230		1.0	%		(1.1	)%
Passenger load factor (percent) (c)		76.6		74.9		74.6		1.7	pts		0.3	pts
Yield (cents) (d)		30.56		29.03		26.57		5.3	%		9.3	%
Passenger revenue per available seat mile (cents) (e)		23.40		21.75		19.83		7.6	%		9.7	%
Operating cost per available seat mile (cents) (f)		22.24		22.23		19.18		0.1	%		15.9	%
Passenger enplanements (thousands) (g)		28,269		27,613		27,707		2.4	%		(0.3	)%
Aircraft at end of period		282		283		281		(0.4	)%		0.7	%
Fuel consumption (gallons in millions)		345		338		336		1.9	%		0.5	%
Average aircraft fuel price including related taxes (dollars per gallon)		3.19		3.12		2.29		2.0	%		36.7	%
Total Mainline and Express
Revenue passenger miles (millions) (a)		73,318		71,321		69,593		2.8	%		2.5	%
Available seat miles (millions) (b)		88,425		86,673		85,818		2.0	%		1.0	%
Passenger load factor (percent) (c)		82.9		82.3		81.1		0.6	pts		1.2	pts
Yield (cents) (d)		16.78		16.21		15.04		3.5	%		7.8	%
Passenger revenue per available seat mile (cents) (e)		13.92		13.34		12.20		4.3	%		9.4	%
Total revenue per available seat mile (cents) (l)		15.64		15.06		13.88		3.9	%		8.5	%
Passenger enplanements (thousands) (g)		82,546		80,572		79,560		2.5	%		1.3	%
Aircraft at end of period		622		623		620		(0.2	)%		0.5	%
Fuel consumption (gallons in millions)		1,447		1,433		1,409		0.9	%		1.7	%
Average aircraft fuel price including related taxes (dollars per gallon)		3.17		3.11		2.25		2.0	%		38.2	%

~~(a)~~US ~~Revenue~~Airways ~~passenger~~Group’s ~~mile~~Results ~~(“RPM”) — A basic measure~~ of ~~sales~~Operations ~~volume. One RPM represents one passenger flown one mile.~~

~~(b)~~In ~~Available~~connection ~~seat~~with ~~mile~~the ~~(“ASM”)~~Merger, —we Aapplied ~~basic~~acquisition ~~measure~~accounting as of ~~production~~December 9, 2013 and our statements of operations for the period from December 9 through December 31, 2013 reflect the related adjustments. ~~One~~As ~~ASM~~a ~~represents~~result, ~~one~~the ~~seat~~financial ~~flown~~statements ~~one~~after ~~mile~~December 9, 2013 are not comparable to the financial statements for any period prior to the Merger. In order to provide a more meaningful comparison to prior year results, the financial results and operating statistics of the 2013 Successor and Predecessor Periods have been combined for purposes of US Airways Group’s Results of Operations below. In addition, certain prior period amounts have been reclassified between various financial statement line items to conform to the new AAG financial statement presentation. See Note 1 to the consolidated financial statements in Part II, Item 8A of this report for further information on the reclassifications.

~~(c)~~In ~~Passenger~~2013, ~~load~~we ~~factor~~realized —operating ~~The~~income ~~percentage~~of $1.0 billion and income before income taxes of ~~available~~$631 ~~seats~~million. ~~that~~We ~~are~~experienced ~~filled~~growth ~~with~~in ~~revenue~~revenues ~~passengers~~in 2013 due to a strong demand for air travel. Net income for 2013 was $392 million, which included a $239 million income tax provision. Our 2013 results were also impacted by recognition of $423 million in net special charges. Excluding the effects of net special items for 2013, we recognized income before income taxes of $1.05 billion and net income of $786 million.

~~(d)~~In ~~Yield~~2012, —we Arealized ~~measure~~operating income of ~~airline~~$850 ~~revenue~~million ~~derived~~and byincome ~~dividing~~before ~~passenger~~income ~~revenue~~taxes of $637 million. We experienced growth in revenues in 2012 due to a strong pricing environment resulting from consumer demand for air travel. Net income for 2012 was $637 million and we did not record an income tax provision. Our 2012 results were also impacted by ~~RPMs~~recognition of $100 million in net special credits. Excluding the effects of net special items for 2012, we recognized income before income taxes and net income, each in the amount of $537 million.

~~(e)~~In ~~Passenger~~2011, ~~revenue~~we ~~per~~realized ~~available~~operating ~~seat~~income ~~mile~~of ~~(“PRASM”)~~$418 —million ~~Passenger~~and income before income taxes of $90 million. We experienced higher revenues ~~divided~~in 2011 due to the strong pricing environment resulting from robust consumer demand for air travel, which substantially offset a significant increase in fuel costs. Net income for 2011 was $71 million, which included a $19 million income tax provision. Our 2011 results were also impacted by ~~ASMs~~recognition of $19 million in net pre-tax special charges and a $21 million non-cash special tax provision. Excluding the effects of net special items for 2011, we recognized income before income taxes of $109 million and net income of $111 million.

49The table below presents our pre-tax special charges (credits) (in millions):


	Year Ended December 31,
	2013			2012			2011
Income before income taxes	$	631		$	637		$	90
Pre-tax special items:
Mainline operating special items, net (a)		415			34			24
Regional operating special items, net (b)		(12	)		3			2
Nonoperating special items, net (c)		20			(137	)		(7	)

Total pre-tax special items		423			(100	)		19

Income before income taxes excluding special items	$	1,054		$	537		$	109


Net income	$	392		$	637		$	71
Total pre-tax special items		423			(100	)		19
Non-cash tax provision special item		—			—			21
Net tax effect of special items		(29	)		—			—

Net income excluding special items	$	786		$	537		$	111

(fa) ~~Operating~~The ~~cost~~2013 ~~per~~period ~~available~~consisted ~~seat~~primarily ~~mile~~of ~~(“CASM”)~~merger —related ~~Operating~~costs ~~expenses~~due ~~divided~~to bythe ~~ASMs~~pilot memorandum of understanding that became effective upon merger close, professional fees, fees to exit the Star Alliance and our codeshare agreement with United Airlines, severance and special merger equity awards.

~~(g)~~The ~~Passenger~~2012 ~~enplanements~~period —consisted ~~The~~primarily ~~number~~ of ~~passengers~~merger onrelated ~~board~~costs anand ~~aircraft,~~auction ~~including~~rate ~~local,~~securities ~~connecting~~arbitration ~~and through passengers~~costs.

~~(h) Block hours —~~ The ~~hours~~2011 ~~measured~~period ~~from~~consisted ~~the~~primarily ~~moment an aircraft first moves under its own power, including taxi time, for the purposes~~ of ~~flight~~costs ~~until~~related ~~the~~to ~~aircraft is docked at~~ the ~~next~~slot ~~point~~transaction ofwith ~~landing~~Delta and ~~its~~auction ~~power~~rate issecurities ~~shut down~~arbitration costs.

(ib) ~~Average~~The ~~stage~~2013 ~~length~~period —consisted ~~The~~primarily ~~average~~ of ~~the~~a ~~distances~~credit ~~flown~~due onto ~~each~~a ~~segment~~favorable ofarbitration ~~every~~ruling ~~route~~related to a vendor contract.

~~(j)~~49 ~~Average passenger journey — The average one-way trip measured in miles for one passenger origination.~~

(k)Table Expressof statistics include Piedmont and PSA, as well as operating and financial results from capacity purchase agreements with Air Wisconsin Airlines Corporation, Republic Airline, Inc., Mesa Airlines, Inc., Chautauqua Airlines, Inc. and SkyWest Airlines, Inc.Contents

(lc) ~~Total~~The ~~revenue~~2013 ~~per~~period ~~available~~consisted ~~seat~~of ~~mile~~$37 ~~(“RASM”)~~million —in ~~Total~~charges ~~revenues~~primarily ~~divided~~related byto ~~total~~non-cash ~~mainline~~write offs of debt discount and ~~express~~debt ~~ASMs~~issuance costs in connection with conversions of 7.25% convertible senior notes and repayment of the former Citicorp North America term loan and a $13 million non-cash mark to market fair value adjustment for 7.25% convertible senior notes that are convertible into shares of AAG Common Stock subsequent to the Merger. These charges were offset in part by a $30 million credit in connection with an award received in an arbitration related to previous investments in auction rate securities.

50The 2012 period primarily consisted of a $142 million gain related to the slot transaction with Delta, offset in part by $3 million in debt prepayment penalties and non-cash write offs of certain debt issuance costs related to the refinancing of two Airbus aircraft.

~~Table~~The 2011 period consisted of ~~Contents~~a $15 million credit in connection with an award received in an arbitration related to investments in auction rate securities, offset in part by $6 million in debt prepayment penalties and non-cash write offs of certain debt issuance costs as well as $2 million of losses related to investments in auction rate securities.

~~2012~~In ~~Compared~~2013, ~~With~~we ~~2011~~utilized NOLs to offset our taxable income. Historically, utilization of NOLs reduced our net deferred tax asset and in turn resulted in the release of our valuation allowance, which offset our tax provision dollar for dollar. In the second quarter of 2013, our pre-tax income and NOL utilization resulted in the use of our remaining valuation allowance associated with federal income taxes. Accordingly, with no remaining federal valuation allowance to release, we recorded $232 million of deferred non-cash federal income tax expense for the 2013 Predecessor Period. We also recorded $7 million of state income tax expense for the 2013 Predecessor Period, related to certain states where NOLs were limited or unavailable to be used.

~~Operating~~As ~~Revenues:~~a result of the closing of the Merger, we and our subsidiaries are now included in the AAG consolidated federal and state income tax returns. In connection with applying acquisition accounting as of December 9, 2013, the fair value of our assets and liabilities resulted in a net deferred tax asset position of $519 million and a deferred tax liability of $306 million for our indefinite-lived assets.

	2012		2011		PercentIncrease(Decrease)
	(In millions)
Operating revenues:
Mainline passenger	$	8,979	$	8,501		5.6
Express passenger		3,326		3,061		8.7
Cargo		155		170		(8.4	)
Other		1,371		1,323		3.6
Total operating revenues	$	13,831	$	13,055		5.9

We provide a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. In making this determination, we consider all available positive and negative evidence in accordance with ASC 740, “Income Taxes.” At December 31, 2013, we had a full valuation allowance against our net deferred tax assets.

~~Total~~The ~~operating~~Merger ~~revenues~~resulted in ~~2012~~a ~~were~~statutory “ownership ~~$13.83~~change” ~~billion~~on December 9, 2013, as ~~compared~~defined in Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), which limits our future ability to utilize NOLs generated before the ownership change and certain subsequently recognized “built-in” losses and deductions, if any, existing as of the date of the ownership change. At December 31, 2013, we had approximately $131.066 billion of gross NOLs to reduce future federal taxable income, the majority of which are expected to be available for use in ~~2011~~the calendar year 2014, ansubject ~~increase~~to the Section 382 limitation described above. The NOLs expire during the years 2028 through 2033. Our net deferred tax assets, which include $1.5 billion of the NOLs, are subject to a full valuation allowance. We also had approximately $~~776~~674 million of state NOLs at December 31, or2013, 5which expire in years 2014 through 2031 if unused.~~9%.~~ ~~Significant~~The ~~changes~~amount of state NOLs that will expire in 2014 if unused is $3 million. At December 31, 2013, the ~~components~~federal and state valuation allowances were $466 million and $53 million, respectively. In accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), utilization of ~~operating~~the NOLs ~~revenues~~after ~~are~~December 9, as2013 ~~follows:~~will result in a corresponding decrease in the valuation allowance and offset our tax provision dollar for dollar.

•When ~~Mainline~~profitable, ~~passenger~~we ~~revenues~~are ~~were~~ordinarily ~~$8.98~~subject ~~billion in 2012 as compared~~ to $8AMT.50 ~~billion~~However ~~in 2011. Mainline RPMs increased 2.7%~~ as ~~mainline~~the ~~capacity,~~result asof ~~measured~~a byspecial ~~ASMs,~~tax ~~increased~~election ~~2.2%,~~made ~~resulting~~ in a2009, ~~0.4~~we ~~point~~were ~~increase in load factor~~ able to ~~84.1%.~~utilize ~~Mainline~~AMT ~~passenger~~NOLs ~~yield increased 2.8%~~ to ~~14.38~~fully ~~cents~~offset inour ~~2012~~AMT ~~from~~taxable ~~13.99~~income ~~cents~~for ineach ~~2011.~~of ~~Mainline~~the ~~PRASM~~years ~~increased~~ended ~~3.3%~~2013, ~~to 12.10 cents in~~ 2012 ~~from~~and ~~11.71 cents in~~ 2011. ~~These increases in mainline yield and PRASM were due principally to the strong revenue environment resulting from ongoing industry capacity discipline and consumer demand for air travel.~~

•For ~~Express~~the ~~passenger~~year ended ~~revenues~~December 31, ~~were $3.33 billion in~~ 2012, aswe ~~compared~~recognized toan ~~$3.06~~AMT ~~billion~~credit inof ~~2011. Express RPMs increased 3.~~$2% asmillion ~~express capacity, as measured by ASMs, increased 1.0%,~~ resulting infrom aour ~~1.7~~elections ~~point~~under ~~increase~~applicable insections ~~load~~of ~~factor~~the toTax ~~76.6%.~~Relief, ~~Express~~Unemployment ~~passenger~~Insurance ~~yield~~Reauthorization, ~~increased~~and byJob ~~5.3%~~Creation toAct ~~30.56~~of ~~cents in 2012 from 29~~2010.03 ~~cents~~In inaddition, ~~2011.~~we ~~Express~~did ~~PRASM~~not ~~increased~~record federal ~~7.6%~~income totax ~~23.40~~expense ~~cents in 2012 from 21.75 cents in 2011. These increases in express yield~~ and ~~PRASM~~recorded ~~were~~$2 ~~the~~million ~~result~~ of ~~the~~state ~~same~~income ~~strong~~tax ~~revenue~~expense ~~environment~~related ~~discussed~~to ~~in mainline passenger revenues above. The availability of first class seating on~~ certain USstates ~~Airways~~where ~~Express~~NOLs ~~regional~~were ~~jets~~limited ~~during~~or ~~2012~~unavailable ~~also contributed~~ to ~~the~~be ~~increase~~used.

•For ~~Cargo~~the ~~revenues~~year ~~were~~ended December 31, 2011, we recorded a special non-cash tax charge of $~~155~~21 million in ~~2012~~connection with the sale of our final remaining investment in auction rate securities in July 2011. This charge recognized in the statement of operations the tax provision that was recorded in other comprehensive income, a ~~decrease~~subset of ~~$15~~stockholders’ ~~million~~equity, orin 8the fourth quarter of 2009.4% In addition, we recognized an AMT credit of $2 million resulting from ~~2011~~our elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. ~~The~~We ~~decrease~~did innot ~~cargo~~record ~~revenues~~any additional ~~was~~federal ~~primarily~~income ~~due~~tax toexpense ~~decreases~~and inrecorded ~~international~~a ~~freight~~nominal ~~volumes~~amount ~~driven~~of bystate ~~uncertainty~~income ~~surrounding~~tax ~~the~~expense ~~European~~related ~~economy~~to certain states where NOLs were limited or unavailable to be used.

•50 Other revenues were $1.37 billion in 2012, an increase of $48 million, or 3.6%, from 2011. The increase in other revenues was driven primarily by higher revenues associated with our frequent flyer program and increases in the volume of passenger ticketing change fees.

51Table of Contents

~~Table~~The oftable ~~Contents~~below sets forth our selected mainline and regional operating data:

Operating Expenses:


							Increase			Increase
	Year Ended December 31,						(Decrease)			(Decrease)
	2013		2012		2011		2013-2012			2012-2011
Mainline
Revenue passenger miles (millions) (a)		65,613		62,435		60,779		5.1	%		2.7	%
Available seat miles (millions) (b)		77,374		74,211		72,603		4.3	%		2.2	%
Passenger load factor (percent) (c)		84.8		84.1		83.7		0.7	pts		0.4	pts
Yield (cents) (d)		14.74		14.32		13.93		2.9	%		2.8	%
Passenger revenue per available seat mile (cents) (e)		12.50		12.05		11.66		3.8	%		3.3	%
Operating cost per available seat mile (cents) (f)		13.31		12.93		12.78		2.9	%		1.2	%
Passenger enplanements (thousands) (g)		56,745		54,277		52,959		4.5	%		2.5	%
Departures (thousands)		457		449		452		1.8	%		(0.5	)%
Aircraft at end of period		343		340		340		0.9	%		—	%
Block hours (thousands) (h)		1,246		1,209		1,217		3.1	%		(0.7	)%
Average stage length (miles) (i)		1,013		1,004		991		0.9	%		1.4	%
Fuel consumption (gallons in millions)		1,144		1,102		1,095		3.9	%		0.6	%
Average aircraft fuel price including related taxes (dollars per gallon)		3.04

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