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US AIRWAYS INC
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/12/2004
Filed Period 12/31/2003

Table of contents

  • Page 1
    US AIRWAYS INC 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/12/2004 Filed Period 12/31/2003

  • Page 2
    ... (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, 2003 Or ¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to US Airways, Inc. (Exact...

  • Page 3
    On March 1, 2004, there were outstanding 1,000 shares of Common Stock.

  • Page 4
    ... Airlines Industry Regulation and Airport Access Employees Aviation Fuel Distribution Channels Frequent Traveler Program Insurance Properties Flight Equipment Ground Facilities Terminal Construction Projects Legal Proceedings Submission of Matters to a Vote of Security Holders Market for US Airways...

  • Page 5
    ... and Procedures Directors and Executive Officers of US Airways Executive Compensation Security Ownership of Certain Beneficial Owners and Management Certain Relationships and Related Transactions Principal Accountant Fees and Services Exhibits, Financial Statement Schedules and Reports on Form...

  • Page 6
    ... air carrier (as ranked by revenue passenger miles (RPMs)). As of December 31, 2003, US Airways operated 282 jet aircraft (see Item 2 "Properties" for additional information related to aircraft operated by US Airways) and provided regularly scheduled service at 90 airports in the continental United...

  • Page 7
    ..., point to point markets. All US Airways Express carriers use US Airways' reservation systems, and have logos, service marks, aircraft paint schemes and uniforms similar to those of US Airways. US Airways' major connecting hubs are at airports in Charlotte, Philadelphia and Pittsburgh. The Company...

  • Page 8
    ...the Philadelphia International Airport, a hub airport for US Airways. The Company anticipates further low-fare low-cost competition in the industry in the future. A substantial portion of US Airways' flights are to or from cities in the eastern United States. Accordingly, severe weather, air traffic...

  • Page 9
    ... the East coast in general has been the part of the country most affected in the aftermath of the attacks. US Airways competes heavily with trains and automobiles as a result of their short-haul network and, as such, have been more affected than other airlines. The increased airport security charges...

  • Page 10
    ... club may access both airlines' airport clubs when traveling on flights operated by the host airline. US Airways and United customers may also redeem Dividend Miles and Mileage Plus awards on both airlines. The agreement also includes provisions for US Airways to join United in the Star Alliance...

  • Page 11
    ..., the Company and several other airlines increased service from LaGuardia which led to excessive flight delays. In response to such delays, the FAA implemented a slot lottery system in December 2000 limiting the number of new flights at LaGuardia. As a result, several airlines, including US Airways...

  • Page 12
    ... status of US Airways' labor agreements with its major employee groups as of December 31, 2003 is as follows: Employees (2) Union (1) Class or Craft Date Contract Amendable ALPA IAMAW IAMAW CWA AFA TWU (1) Pilots Mechanics and related employees Fleet service employees Passenger service employees...

  • Page 13
    ... class, and tickets on US Airways or on one of US Airways' FTP airline partners. US Airways and its FTP airline partners limit the number of seats allocated per flight for award recipients by using various inventory management techniques. Award travel for all but the highest-level Dividend Miles...

  • Page 14
    ... Dividend Miles. Estimated future travel awards are valued at the estimated average incremental cost of carrying one additional passenger. Incremental costs include unit costs for passenger food, beverages and supplies, fuel, reservations, communications, insurance and denied boarding compensation...

  • Page 15
    ... Equipment As of December 31, 2003, US Airways operated the following jet aircraft: Average Seat Capacity Average Age (years) Owned (1) Leased (2) Total Type Airbus A330 Boeing 767-200ER Boeing 757-200 Airbus A321 Boeing 737-400 Airbus A320 Boeing 737-300 Airbus A319 266 203 182 169 144 142 126...

  • Page 16
    ... US Airways is a participant in the Civil Reserve Air Fleet (CRAF), a voluntary program administered by the Air Mobility Command (AMC). The General Services Administration of the U.S. Government requires that airlines participate in CRAF in order to receive U.S. Government business. US Airways...

  • Page 17
    ... The Chapter 11 case is discussed in greater detail in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." On February 26, 2004, a company called I.A.P. Intermodal, LLC filed suit against US Airways Group and its wholly owned airline subsidiaries alleging...

  • Page 18
    ... outcome. US Airways is named as a defendant along with most of the major domestic airlines, several national carriers and a number of international carriers, in a class action lawsuit on behalf of all United States-based travel agents filed in federal court in North Carolina. The complaint alleges...

  • Page 19
    ...beneficiary, quantum meruit and constructive trust. The court in the Philadelphia action dismissed US Airways from the lawsuit and dismissed the third party beneficiary claims against the City and PAID. These rulings are subject to appeal at a later date. Should Limbach and/or Limbach/Parker recover...

  • Page 20
    ...several national and a number of international carriers, in a class action lawsuit on behalf of all United States-based travel agents filed in federal district court for the Northern District of California. The complaint alleges violation of the federal antitrust laws with respect to commission rate...

  • Page 21
    ... US Airways Pilot Retirement Board requesting arbitration of their claim for benefits that they believe were erroneously calculated. The Retirement Board has selected an arbitrator to decide certain issues related to the plaintiffs' claims for benefits. The Company is unable to predict at this time...

  • Page 22
    ... 5. Market for US Airways' Common Equity and Related Stockholder Matters US Airways Group owns all of US Airways' outstanding common stock, par value $1 (US Airways Common Stock). US Airways' board of directors has not authorized the payment of dividends on the common stock since 1988. US Airways...

  • Page 23
    ...1, 2000, US Airways changed its method of accounting for the sale of mileage credits in its Dividend Miles program from recognizing all revenue when credits are sold, to deferring the portion of revenue attributable to future transportation and recognizing it as passenger revenue when the service is...

  • Page 24
    .... Using the advantage of low unit costs, these carriers offer lower passenger fares, particularly those targeted at business passengers, in order to shift demand from traditional network carriers. As a result of growth, these low-fare low-cost carriers now transport approximately 25% of all domestic...

  • Page 25
    ... carriers. In addition, low-fare low-cost airlines are receiving an increasing number of operating rights in slot-restricted airports. The threat from low-fare low-cost airlines accelerated noticeably in 2003 as the capital markets opened up to them resulting in their ordering hundreds of aircraft...

  • Page 26
    ... cost per available seat mile by at least 25% built around a complete business remodeling that will allow it to be profitable in a variety of competitive environments. Key elements of this plan include marketing and distribution techniques, employee compensation, benefits and work rules, and airline...

  • Page 27
    ... administrative and priority claims, and the distribution of shares (or warrants to purchase shares) of new equity in the reorganized US Airways Group, Inc. (Reorganized US Airways Group) to the Stabilization Board, the Retirement Systems of Alabama Holdings LLC (RSA), the Company's management...

  • Page 28
    ... of new equity to claimants in Reorganized US Airways Group on account thereof, are not presently known. On December 30, 2003, the Bankruptcy Court allowed the $2.1 billion claim by the PBGC related to the termination of US Airways' pilot pension plan. Given that this plan met the standards of...

  • Page 29
    ..., US Airways has agreed to operate a schedule close to its existing service at Pittsburgh through September 2004 in order to allow negotiations to continue. Results of Operations As discussed above, the Company emerged from Chapter 11 and adopted fresh-start reporting on March 31, 2003. References...

  • Page 30
    ...resulting from the issuance of common stock to employees covered by collective bargaining agreements following emergence from Chapter 11. Aviation fuel increased 6.6% due to higher average fuel prices partially offset by schedule-driven decreases in consumption. US Airways Express capacity purchases...

  • Page 31
    ... rate and salary reductions relating to the Company's reorganization. This was partially offset by increases in employee pension and benefit expenses. Aviation fuel decreased 30.6% due to lower average fuel prices and schedule-driven decreases in consumption. US Airways Express capacity purchases...

  • Page 32
    ...items and Government compensation. Other Income (Expense)-Interest income decreased due to lower average investment balances and return rates. Interest expense increased due to the higher level of debt outstanding. Refer to "Description of Unusual Items" below for information on Reorganization items...

  • Page 33
    ..., 2001, the Company reviewed other aircraft-related assets which resulted in a pretax charge of $15 million as certain aircraft assets had carrying values in excess of their fair value less costs to sell. Management estimated fair value based on recent sales and leasing transactions. US Airways also...

  • Page 34
    ... aircraft (seven A319s for 2003 and 34 F-100s, two B757-200s and one B737-400 for 2002) that were legally abandoned as part of US Airways' Chapter 11 reorganization. Related aircraft liabilities were adjusted for each aircraft's expected allowed collateral value. As a result of schedule reductions...

  • Page 35
    ... (5) certain airlines that receive the aviation-related assistance must agree to limit the total cash compensation for certain executive officers during the 12-month period beginning April 1, 2003 to an amount equal to the annual salary paid to that officer during the air carrier's fiscal year 2002...

  • Page 36
    ... travelers and the related miles they flew. System statistics encompass all wholly owned airline subsidiaries of US Airways Group, including US Airways, Allegheny Airlines, Piedmont Airlines, PSA Airlines as well as operating and financial results from capacity purchase agreements with Mesa Airlines...

  • Page 37
    ... of liquidity and capital resources, full year 2003 has been compared to 2002 as included, in part, in the Company's Consolidated Statements of Cash Flows (which are contained in Part II, Item 8 of this report). As of December 31, 2003, the Company's Cash, Cash equivalents and Short-term investments...

  • Page 38
    ...aircraft and related parts. During the first quarter of 2002, US Airways entered into agreements to sell 97 surplus DC-9, B737-200 and MD-80 aircraft. Decrease (increase) in short-term investments reflects proceeds from the sale of short-term investments. For 2001, investing activities included cash...

  • Page 39
    ...ATSB Guarantee, with such guarantee fee increasing by ten basis points annually. In addition, the Stabilization Board received 7,635,000 warrants that enable it to purchase shares of Reorganized US Airways Group's Class A Common Stock at $7.42 per share. The maturity date of the ATSB Loan is October...

  • Page 40
    ... the provision related to the going concern paragraph in the independent auditor's report for the Company's audited financial statements for the year December 31, 2003, US Airways agreed to change the month end minimum unrestricted cash covenant to exceed the lesser of the outstanding ATSB Loan...

  • Page 41
    ...passed, would further reduce US Airways' 2004 minimum required contributions. As of December 31, 2003, US Airways Group has 19 A320-family aircraft on firm order scheduled for delivery in the years 2007 through 2009. US Airways Group also has 10 A330-200 aircraft on firm order scheduled for delivery...

  • Page 42
    ...increased or decreased weekly due to changes in unflown ticket liability, credit ratings, cash balances and other financial and non-financial measures. The balance at December 31, 2003 was $159 million and was included in noncurrent restricted cash on the Consolidated Balance Sheet. US Airways Group...

  • Page 43
    ... of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 142 requires management to make judgments about the fair value of the reporting unit to determine whether goodwill is impaired. The reporting unit is US Airways. The Company believes...

  • Page 44
    ... approach, the fair value of the reporting unit is based on quoted market prices and the number of shares outstanding for US Airways Group common stock. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. The income approach...

  • Page 45
    ... of fair value represent the Company's best estimate based on appraisals, industry trends and reference to market rates and transactions. Changes in industry capacity and demand for air transportation can significantly impact the fair value of aircraft and related assets. Refer to "Description...

  • Page 46
    .... Pension expense increases as the expected rate of return on plan assets decreases. Lowering the expected long-term rate of return on plan assets by onehalf of a percentage point (from 8.00% to 7.50%) would increase US Airways' 2004 pension expense by approximately $8 million. US Airways discounted...

  • Page 47
    ... does not address measurement and recognition accounting for pension and postretirement benefits. SFAS 132 (revised 2003) requires additional disclosures related to the description of plan assets including investment strategies, plan obligations, cash flows and net periodic benefit cost of defined...

  • Page 48
    .... As long as the Company maintains or improves its cash and short-term investment balance, it is effectively self-hedged against changes in interest rates with regard to its floating rate debt. As noted in "Contractual Obligations" above, US Airways Group has future aircraft purchase commitments of...

  • Page 49
    ... Price Risk US Airways holds Sabre Holdings Corporation (Sabre) stock options that have a fair value and carrying value of $7 million as of December 31, 2003. Fair value is computed using the Black-Scholes stock option pricing model. A hypothetical ten percent decrease in the December 31, 2003 value...

  • Page 50
    ... financial statements referred to above present fairly, in all material respects, the financial position of US Airways, Inc. and subsidiary as of December 31, 2003 (Successor Company) and 2002 (Predecessor Company), and the results of their operations and their cash flows for the nine months ended...

  • Page 51
    ... Company Year Ended December 31, 2002 2001 Nine Months Ended December 31, 2003 Three Months Ended March 31, 2003 Operating Revenues Passenger transportation Cargo and freight Other Total Operating Revenues Operating Expenses Personnel costs Aviation fuel US Airways Express capacity purchases...

  • Page 52
    Table of Contents US Airways, Inc. Consolidated Balance Sheets December 31, (dollars in millions) Successor Company Predecessor Company 2003 2002 ASSETS Current Assets Cash and cash equivalents Short-term investments Restricted cash Receivables, net Receivables from related parties, net ...

  • Page 53
    ...capital Accumulated deficit Deferred compensation Receivable from parent company Accumulated other comprehensive loss Total Stockholder's Equity (Deficit) $ 349 (160) (45) - (55) 89 8,349 $ 2,661 (4,485) - (2,262) (870) (4,956) 6,464 See accompanying Notes to Consolidated Financial Statements. 47

  • Page 54
    ...Decrease (increase) in short-term investments Decrease (increase) in restricted cash and investments Proceeds from repayment of parent company loans Funding of parent company's aircraft purchase deposits Merger of USLM Corporation Other Net cash provided by (used for) investing activities Cash flows...

  • Page 55
    Supplemental Information Interest paid during the period Income taxes refunded (paid) during the period $ $ 126 $ (18) $ 72 $ 2 $ 248 $ 175 $ 274 113 See accompanying Notes to Consolidated Financial Statements 48

  • Page 56
    .... Interest related to $232 million financing to purchase Shuttle, Inc., net of income tax effect Unrealized loss on available-for-sale securities, net of reclassification adjustment Unrealized gain on fuel cash flow hedges, net of reclassification adjustment Minimum pension liability change Net loss...

  • Page 57
    ... loss on fuel cash flow hedges, net of reclassification adjustment Termination of pilot pension plan Net income Reorganization adjustments: Adjustments to Stockholder's Deficit in connection with reorganization Repayment of parent company's loan Deferred compensation related to labor groups Total...

  • Page 58
    ... for under the Plan of Reorganization, investors should refer to the Plan of Reorganization confirmed by the Bankruptcy Court on March 18, 2003 and filed with US Airways Group's Current Report on Form 8-K, dated March 18, 2003 and filed with the SEC on April 2, 2003. RSA Investment Pursuant to...

  • Page 59
    ... of new equity to claimants in Reorganized US Airways Group on account thereof, are not presently known. On December 30, 2003, the Bankruptcy Court allowed the $2.1 billion claim by the PBGC related to the termination of US Airways' pilot pension plan. Given that this plan met the standards of...

  • Page 60
    ... year amounts have been reclassified to conform with the 2003 presentation. Among these, revenues related to capacity purchase agreements with US Airways Group's wholly owned subsidiaries and regional jet affiliates were reclassified from the former classification "US Airways Express transportation...

  • Page 61
    ... carriers. In addition, low-fare low-cost airlines are receiving an increasing number of operating rights in slot-restricted airports. The threat from lowfare low-cost airlines accelerated noticeably in 2003 as the capital markets opened up to them resulting in their ordering hundreds of aircraft...

  • Page 62
    ... limit, among other things, the Company's ability to pay dividends on its common stock, make additional corporate investments and acquisitions, enter into mergers and consolidations and modify certain concessions obtained as part of the Chapter 11 reorganization. Effective March 12, 2004, US Airways...

  • Page 63
    ... companies with high credit ratings and securities backed by the U.S. Government. All highly liquid investments purchased within three months of maturity are classified as Cash equivalents. All other highly liquid investments are classified as Short-term investments. US Airways classifies securities...

  • Page 64
    ... to fund certain taxes and fees and collateralize letters of credit and workers' compensation claims, credit card processing collateral and fuel hedge collateral. Restricted cash is stated at cost which approximates fair value. See Note 4(b) for further information. (e) Materials and supplies...

  • Page 65
    ... quoted market prices for US Airways Group common stock and the number of shares outstanding of US Airways Group common stock. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. Cash flow projections utilized for the 2003 and...

  • Page 66
    ... balances payable and unused tickets the estimated incremental cost of travel awards earned by participants in its Dividend Miles frequent traveler program when the requisite mileage award levels are achieved. US Airways also sells mileage credits to certain marketing partners. US Airways defers...

  • Page 67
    ... of 2003, a $34 million favorable adjustment was made to Passenger transportation revenue to reflect an increase in expired tickets. US Airways purchases all of the capacity (available seat miles) generated by US Airways Group's wholly owned regional air carriers and the capacity of Mesa Airlines...

  • Page 68
    ... information related to US Airways' transactions with its affiliates. See Note 2(i) above for information on the sale of Dividend Miles that are recognized as a component of Passenger transportation revenue. (m) Stock-based compensation The Predecessor Company applied the provisions of Accounting...

  • Page 69
    ...residual value of the aircraft. As of December 31, 2003, future lease payments required under these leases totaled $2.96 billion. Based on its cash flow analysis, the Company believes that it is not the primary beneficiary under these lease arrangements. The Company also reviewed long-term operating...

  • Page 70
    ... Estimates of fair value represent the Company's best estimate based on independent appraisals and valuations and, where the foregoing are not available, industry trends and by reference to market rates and transactions. US Airway Group's equity value of $438 million at March 31, 2003 was determined...

  • Page 71
    ...$121 million decrease to Long-term debt, net of current maturities, a $13 million increase to Deferred gains and credits, net, a $54 million increase to Other intangibles, net, a $15 million decrease to Employee benefit liabilities and other and a $6 million decrease to Accounts payable. In addition...

  • Page 72
    ... receive any furlough pay benefit. Includes aircraft (seven A319s for 2003 and 34 F-100s, two B757-200s and one B737-400 for 2002) that were legally abandoned as part of US Airways' Chapter 11 reorganization. Related aircraft liabilities were adjusted for each aircraft's expected allowed collateral...

  • Page 73
    ... to the Petition Date related to the Company's interline, clearinghouse, code sharing and other similar agreements; (e) pay certain pre-petition taxes and fees, including transportation excise taxes, payroll taxes and passenger facilities charges; and (f) pay certain other obligations. Substantially...

  • Page 74
    ... determined based upon quoted market prices. Cash equivalents and restricted cash are carried at cost which approximates fair value. US Airways estimated the fair values of its note receivable and long-term debt by discounting expected future cash flows using current rates offered to US Airways for...

  • Page 75
    ...Months Ended March 31, 2003 2002 2001 Tax provision (credit) computed at federal statutory rate Book expenses not deductible for tax purposes State income tax provision (credit), net of federal benefit Increase (decrease) in the federal valuation allowance Limitation of recognizing tax benefit of...

  • Page 76
    Provision (credit) for income taxes Effective tax rate $ 6 4% $ - - $ (255) 13% $ 209 12% 68

  • Page 77
    ... Revenue Code Section 382 change of ownership occurred for US Airways Group upon issuance of new common stock to creditors. Section 382 will substantially limit the annual usage of the tax attributes that were generated prior to the change in ownership. The federal income tax returns of the Company...

  • Page 78
    ... order to provide the additional liquidity necessary to carry out its restructuring plan. The ATSB Loan was funded on the Effective Date. The ATSB Loan is guaranteed by US Airways Group and each of US Airways Group's domestic subsidiaries (other than reorganized US Airways). The ATSB Loan is secured...

  • Page 79
    ...the provision related to the going concern paragraph in the independent auditor's report for the Company's audited financial statements for the year ended December 31, 2003, US Airways agreed to change the month end minimum unrestricted cash covenant to exceed the lesser of the outstanding ATSB Loan...

  • Page 80
    ...53 billion principal amount of long-term debt as of December 31, 2003 are subject to adjustment to reflect changes in floating interest rates. 7. Employee Pension and Benefit Plans Substantially all of US Airways' employees meeting certain service and other requirements are eligible to participate...

  • Page 81
    ... guidance, when issued, could require US Airways to change previously reported information. The following table sets forth changes in the fair value of plan assets, benefit obligations and the funded status of the plans as of the measurement date of September 30, 2003 and 2002, in addition to the...

  • Page 82
    ...24 billion, $4.74 billion and $2.82 billion, respectively, as of September 30, 2002. In 2003, US Airways recognized curtailments and settlements related to the termination of certain defined benefit pension plans. These curtailments and settlements were recognized in accordance with Statement of 73

  • Page 83
    ...on amounts reported for retiree health care plans. A one-percentage point change in the health care cost trend rates would have the following effects on Other Postretirement Benefits as of September 30, 2003 (in millions): 1% Increase 1% Decrease Effect on total service and interest costs Effect on...

  • Page 84
    Total periodic cost $ 51 $ (338) $ 365 $ 198 74

  • Page 85
    ... to 2013 $ 115 115 117 119 123 717 $ 69 73 76 79 82 454 US Airways assumed that its pension plans' assets would generate a long-term rate of return of 8.00% at September 30, 2003. This rate is lower than the assumed rate of 8.75% used at September 30, 2002. The expected long-term rate of return...

  • Page 86
    ... March 31, 2003 and years ended December 31, 2002 and 2001, respectively. See Note 7(d) for information related to US Airways' ESOP. In connection with its reorganization under Chapter 11 of the Bankruptcy Code, US Airways terminated the Retirement Income Plan for Pilots of US Airways, Inc. and the...

  • Page 87
    ... ended June 30, 2003. (b) Leases US Airways leases certain aircraft, engines and ground equipment, in addition to the majority of its ground facilities. Ground facilities include executive offices, maintenance facilities and ticket and administrative offices. Public airports are utilized for flight...

  • Page 88
    ... ended December 31, 2003, three months ended March 31, 2003, and years ended December 31, 2002 and 2001, rental expense under operating leases was $565 million, $185 million, $792 million and $850 million, respectively. US Airways also leases certain owned flight equipment to both third and related...

  • Page 89
    ..., without regard to the number of passengers onboard. In addition, these agreements provide that certain variable costs, such as fuel and airport landing fees, will be reimbursed 100% by US Airways. US Airways controls marketing, scheduling, ticketing, pricing and seat inventories. The regional jet...

  • Page 90
    ... outcome. US Airways is named as a defendant along with most of the major domestic airlines, several national carriers and a number of international carriers, in a class action lawsuit on behalf of all United States-based travel agents filed in federal court in North Carolina. The complaint alleges...

  • Page 91
    ...beneficiary, quantum meruit and constructive trust. The court in the Philadelphia action dismissed US Airways from the lawsuit and dismissed the third party beneficiary claims against the City and PAID. These rulings are subject to appeal at a later date. Should Limbach and/or Limbach/Parker recover...

  • Page 92
    ...several national and a number of international carriers, in a class action lawsuit on behalf of all United States-based travel agents filed in federal district court for the Northern District of California. The complaint alleges violation of the federal antitrust laws with respect to commission rate...

  • Page 93
    ... US Airways Pilot Retirement Board requesting arbitration of their claim for benefits that they believe were erroneously calculated. The Retirement Board has selected an arbitrator to decide certain issues related to the plaintiffs' claims for benefits. The Company is unable to predict at this time...

  • Page 94
    ... companies with high credit ratings and securities backed by the U.S. Government. As of December 31, 2003, most of US Airways' receivables related to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on US Airways...

  • Page 95
    ...) was recognized based on the fair market value of the stock on the date of grant. Except on limited occasions, no deferred compensation was recognized when options to purchase US Airways Group common stock were granted to employees (Option Grants) because the exercise price of the stock options was...

  • Page 96
    ...million in 2001. Deferred compensation related to Stock Grants was $5 million as of December 31, 2002. The weighted average fair value per stock option for stock options which had an exercise price equal to the fair market value of a share of US Airways Group common stock at date of grant was $3 for...

  • Page 97
    ... air transportation for passengers and cargo. This allows it to benefit from an integrated revenue pricing and route network that includes US Airways, Piedmont, Allegheny, PSA and third-party carriers that fly under capacity purchase agreements as part of US Airways Express. The flight equipment...

  • Page 98
    ...(available seat miles or ASMs) generated by US Airways Group's wholly owned regional airline subsidiaries at a rate per ASM that is periodically determined by US Airways and, concurrently, recognizes revenues that result primarily from passengers being carried by these affiliated companies. The rate...

  • Page 99
    ...15 directors to Reorganized US Airways Group's Board of Directors. Total amounts due to RSA at December 31, 2003 ...ended December 31, 2003. See also Notes 1, 2(b) and 6 for additional information with regard to the terms of RSA's investment in US Airways Group and the ATSB Loan. Debt outstanding...

  • Page 100
    ... recoveries) Sales, retirements and transfers Balance at end of year Payments Other Nine months ended December 31, 2003 Allowance for obsolescence of inventories Allowance for uncollectible accounts Reserves for workforce reduction (a) Three months ended March 31, 2003 Allowance for obsolescence...

  • Page 101
    ...): Successor Company Predecessor Company Year Ended December 31, 2002 2001 Nine Months Ended December 31, 2003 Aircraft order cancellation penalty Aircraft impairments and related charges Pension and postretirement benefit curtailments Employee severance including benefits Future aircraft lease...

  • Page 102
    ..., 2001, the Company reviewed other aircraft-related assets which resulted in a pretax charge of $15 million as certain aircraft assets had carrying values in excess of their fair value less costs to sell. Management estimated fair value based on recent sales and leasing transactions. US Airways also...

  • Page 103
    ... (5) certain airlines that receive the aviation-related assistance must agree to limit the total cash compensation for certain executive officers during the 12-month period beginning April 1, 2003 to an amount equal to the annual salary paid to that officer during the air carrier's fiscal year 2002...

  • Page 104
    ...Ethics The Company has a code of ethics that applies to all employees, officers, directors and agents of US Airways Group and its wholly owned subsidiaries, including its principal executive officer, principal financial officer and principal accounting officer. A copy of this code, "Business Conduct...

  • Page 105
    ... Fees and Services" in the definitive Proxy Statement of US Airways Group, Inc. to be filed pursuant to Regulation 14A relating to the Annual Meeting of Stockholders on May 19, 2004 and is incorporated herein by reference. Part IV Item 15. Exhibits, Financial Statement Schedules and Reports...

  • Page 106
    ...the Employment Agreement dated March 11, 2002 between US Airways and the President and Chief Executive Officer (incorporated by reference to Exhibit 10.1 to US Airways' Quarterly Report on Form 10-Q for the quarter ended March 31, 2003). Employment agreement between US Airways and its Executive Vice...

  • Page 107
    ... Agreement dated June 26, 2002 between US Airways and the Executive Vice President-Operations (incorporated by reference to Exhibit 10.3 to US Airways' Quarterly Report on Form 10-Q for the quarter ended March 31, 2003). Severance Agreement between US Airways and the Senior Vice President-Marketing...

  • Page 108
    ... 10.17 to US Airways' Annual Report on Form 10-K for the year ended December 31, 2002). Loan Agreement dated March 31, 2003 among US Airways, Inc. and Phoenix American Financial Services, Inc., Bank of America, N.A. and the Air Transportation Stabilization Board (incorporated by reference to Exhibit...

  • Page 109
    ... 2003 performance for US Airways Group, Inc. and US Airways, Inc. including certain forward looking information. News release disclosing US Airways' statement on court decision regarding maintenance repair providers for 10 US Airways Airbus A319 aircraft. News release disclosing US Airways Group...

  • Page 110
    ... duly authorized, on March 12, 2004. US Airways, Inc. (registrant) By: /s/ David N. Siegel David N. Siegel, Director, President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 111
    Table of Contents By: William D. Pollock, Director By: Raymond W. Smith, Director By: By: William T. Stephens, Director /s/ Neal S. Cohen Neal S. Cohen, Attorney-In-Fact * Signed pursuant to power of attorney filed herewith. 101 * * *

  • Page 112
    ... as to the security of the executives' supplemental retirement benefit; and WHEREAS, as part of the recent First Amended Joint Plan of Reorganization of US Airways Group, Inc. and its Affiliated Debtors and Debtors-inPossession, dated January 17, 2003 (the "Reorg Plan"), the Company has agreed to...

  • Page 113
    ... of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (v) any acquisition directly from Group, (w) any acquisition by Group or any of its subsidiaries, (x) any acquisition by any employee benefit plan...

  • Page 114
    ..., the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) in...

  • Page 115
    ... bonus under the Company's Incentive Compensation Plan (or any successor plan) with respect to such year. 1.11 "Effective Date" shall mean October 16, 2003. 1.12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Any reference to a particular ERISA...

  • Page 116
    ...of active employment with the Company during which substantial services were rendered as an employee (including employment before the Effective Date). Years of Actual Service shall be measured from the Participant's date of hire. Participants will be credited with Years of Service in units of 1/12th...

  • Page 117
    ...receive a lump sum benefit equal to the actual value of his or her Account balance under this Plan (determined as of the end of the calendar month in which the Participant terminates employment). ARTICLE IV CONTRIBUTIONS AND VESTING Section 4.1 Contributions. (a) Scheduled Contributions. The Company...

  • Page 118
    ... the Change in Control Contribution will not be subject to any maximum annual limits that may be applicable to the calculation of the Scheduled Contribution for such year. (c) Disability, etc.. If a Participant receives either short-term or long-term disability benefits under any Company plan, then...

  • Page 119
    ... contingent beneficiaries to receive his or her Retirement Benefit, and may designate the proportions in which such beneficiaries are to receive such payments. The Participant may change such designations from time to time, and the last written designation filed with the Administrator prior to the...

  • Page 120
    ...payment to the Participant. The amount of any withdrawal shall be determined by the value of the amounts credited to the Participant's Account under the Plan as of the date that the authorized directions are received by the Trustee from the Administrator to make the withdrawal payment, or such other...

  • Page 121
    ... Administrator in good faith. Such indemnification shall include attorneys' fees and other costs and expenses reasonably incurred in defense of any action brought by reason of any such act or failure to act. ARTICLE VIII CLAIMS PROCEDURE Section 8.1 General. Any claim for a Retirement Benefit under...

  • Page 122
    ...references(s) to the pertinent provisions of the Plan on which the decision is based, a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim for benefits...

  • Page 123
    ...not be includable as salary or compensation for purposes of determining the amount of employee benefits under any other retirement, pension, profit-sharing or welfare benefit plans of the Company. Section 9.9 Bonding. The Administrator and all agents and advisors employed by it shall not be required...

  • Page 124
    IN WITNESS WHEREOF, the Company has caused the Plan to be executed by its duly authorized officers on the day and year first above written. US AIRWAYS, INC. By: /s/ Jerrold A. Glass Title: Senior Vice President - Employee Relations 13

  • Page 125
    EXHIBIT A PARTICIPANTS AS OF EFFECTIVE DATE Participants with Prior SERPs N. Bruce Ashby B. Ben Baldanza Jerrold A. Glass Neal S. Cohen Alan W. Crellin John Prestifilippo Elizabeth Lanier Participants who do not have Prior SERPs P. Douglas McKeen David Davis Christopher Chiames

  • Page 126
    ... of the Company by providing a supplemental executive retirement benefit; and WHEREAS, as part of the recent First Amended Joint Plan of Reorganization of US Airways Group, Inc. and its Affiliated Debtors and Debtors-inPossession, dated January 17, 2003 (the "Reorg Plan"), the Company has agreed...

  • Page 127
    ... of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (v) any acquisition directly from Group, (w) any acquisition by Group or any of its subsidiaries, (x) any acquisition by any employee benefit plan...

  • Page 128
    ..., the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) in...

  • Page 129
    ... bonus under the Company's Incentive Compensation Plan (or any successor plan) with respect to such year. 1.11 "Effective Date" shall mean October 16, 2003. 1.12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Any reference to a particular ERISA...

  • Page 130
    ...sum benefit payable under this Plan, as determined under Article III. 1.22 "Scheduled Allocation" shall have the meaning given in Section 4.1 hereof. 1.23 "Years of Actual Service" shall mean, as of any Determination Date, the Participant's total number of years of active employment with the Company...

  • Page 131
    ... of the Change in Control Allocation will not be subject to any maximum annual limits that may be applicable to the calculation of the Scheduled Allocation for such year. (c) Disability, etc. If a Participant receives either short-term or long-term disability benefits under any Company plan, then...

  • Page 132
    ... payable for the year during which such termination of employment or the Normal Retirement Date occurs. Section 4.2 Vesting. A Participant shall at all times be 100% vested in his or her Account balance under this Plan. ARTICLE V PAYMENT OF BENEFITS Section 5.1 Form of Payment. All benefits payable...

  • Page 133
    ... of benefits under the Plan), subject to the claims of the Company's general creditors. ARTICLE VII ADMINISTRATION Section 7.1 General. Except as otherwise specifically provided in the Plan, the Administrator shall be responsible for administration of the Plan. Section 7.2 Administrative Rules. The...

  • Page 134
    ... Administrator in good faith. Such indemnification shall include attorneys' fees and other costs and expenses reasonably incurred in defense of any action brought by reason of any such act or failure to act. ARTICLE VIII CLAIMS PROCEDURE Section 8.1 General. Any claim for a Retirement Benefit under...

  • Page 135
    ...references(s) to the pertinent provisions of the Plan on which the decision is based, a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim for benefits...

  • Page 136
    ...not be includable as salary or compensation for purposes of determining the amount of employee benefits under any other retirement, pension, profit-sharing or welfare benefit plans of the Company. Section 9.9 Bonding. The Administrator and all agents and advisors employed by it shall not be required...

  • Page 137
    IN WITNESS WHEREOF, the Company has caused the Plan to be executed by its duly authorized officers on the day and year first above written. US AIRWAYS, INC. By: /s/ Jerrold A. Glass Title: Senior Vice President - Employee Relations 12

  • Page 138
    EXHIBIT A PARTICIPANTS AS OF EFFECTIVE DATE Participants with Prior SERPs N. Bruce Ashby B. Ben Baldanza Jerrold A. Glass Neal S. Cohen Alan W. Crellin John Prestifilippo Elizabeth Lanier Participants who do not have Prior SERPs P. Douglas McKeen David Davis Christopher Chiames

  • Page 139
    ... 1, 2003 and as Executive Vice President - Corporate Affairs and General Counsel upon the occurrence of the "Effective Date" of the Company's First Amended Joint Plan of Reorganization (the "Plan") without further action by the Company or the Board; WHEREAS, the Board believes it to be in the best...

  • Page 140
    ... and if the Executive's employment with the Company is terminated or the Executive ceases to be an officer of the Company prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment or cessation of status as an...

  • Page 141
    ... Executive's 65th birthday ("Normal Retirement Date"); provided, however, that commencing on the date one year after the Effective Date, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal Date"), the Employment...

  • Page 142
    ... of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (v) any acquisition directly from Group, (w) any acquisition by Group or any of its subsidiaries, (x) any acquisition by any employee benefit plan...

  • Page 143
    ... to or does so file, beneficial ownership of all of the Outstanding Group Common Stock and Outstanding Group Voting Securities beneficially owned by it on such date; or (b) Individuals who, as of the date hereof, constitute Group's Board of Directors (the "Incumbent Board") cease for any reason...

  • Page 144
    ... to the Plan in connection with the Company's emergence from chapter 11 reorganization or under the Investment Agreement dated as of September 26, 2002 and amended as of January 17, 2003 between the Company and The Retirement Systems of Alabama and Retirement Systems of Alabama Holdings LLC (which...

  • Page 145
    ... Vice President, Corporate Affairs and General Counsel with substantially similar duties to the position held by the Executive on the Effective Date of the Plan, (B) the Executive shall report directly to the President and Chief Executive Officer of the Company, and (C) the Executive's services...

  • Page 146
    ... speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is also expressly...

  • Page 147
    ... referred to as the "Base Salary". (ii) Annual Bonus. In addition to Base Salary, the Executive shall be awarded, for each fiscal year during the Employment Period, an annual bonus as shall be determined by the Board or its Human Resources Committee in accordance with the Incentive Compensation Plan...

  • Page 148
    ...Incentive Plan awards made with respect to calendar years 2002 and 2003. (iii) Long-Term Incentive Plan. In addition to Base Salary and Annual Bonus, the Executive shall be eligible to participate in the LongTerm Incentive Plan in accordance with its terms as approved by the Group Board of Directors...

  • Page 149
    ..., the Executive shall be entitled to participate during the Employment Period in all incentive, savings and retirement plans, practices, policies and programs applicable on or after the Effective Date to other key employees of the Company and its subsidiaries, in each case providing benefits which...

  • Page 150
    ... receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its subsidiaries (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance...

  • Page 151
    ... $10,000) to cover your tax liability resulting from such travel and (x) free access to US Airways Club facilities for you and your eligible family members, (y) an annual car allowance of $9,000 which is paid in monthly installments (z) and certain relocation benefits including up to twenty-four (24...

  • Page 152
    ... by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). During such six month period and until the Disability Effective Date, Executive shall be entitled to all compensation provided...

  • Page 153
    ...; (ii) the failure by Group to elect the Executive to the position of Executive Vice President, Corporate Affairs and General Counsel with substantially similar duties to the position held by the Executive on the Effective Date or any other action by Group which results in the diminution of the...

  • Page 154
    ... the Change of Control Date, or if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other key employees of the Company and its subsidiaries; (iv) the Company's requiring the Executive to be based at any office or location other...

  • Page 155
    ... shall be the date on which the Company notifies the Executive of such termination and (ii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 17

  • Page 156
    ... dispute was given (including, but not limited to, Base Salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in...

  • Page 157
    ..., the Executive's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Company and any of its subsidiaries to surviving families of employees of the Company and such subsidiaries under such plans, programs, practices and policies 19

  • Page 158
    ... the Disability Effective Date to receive disability and other benefits at least equal to the most favorable of those provided by the Company and its subsidiaries to disabled employees and/or their families in accordance with such plans, programs, practices and policies relating to disability, if...

  • Page 159
    ... to a Change of Control, the Company shall terminate the Executive's employment other than for Cause, Disability or death or if the Executive shall terminate her employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 5 days after to Date of Termination...

  • Page 160
    ... the bonus that would have been payable to the Executive from the Company for the last full fiscal year ending prior to the Date of Termination (regardless of whether the Executive was employed in an officer position for all or any part of such fiscal year) as if Group had achieved the "target level...

  • Page 161
    ... annual bonus calculated to be equal to the bonus that would have been payable to the Executive from the Company for the last full fiscal year ending prior to the Date of Termination (regardless of whether the Executive was employed in an officer position for all or any part of such fiscal year...

  • Page 162
    ...life insurance, in accordance with the most favorable plans, practices, programs or policies of the Company and its subsidiaries in effect on or after the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key employees and their families...

  • Page 163
    ...restricted stock or other agreements with Group, the Company or any of its subsidiaries. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any Plan, policy, practice or program of Group, the Company or any of its subsidiaries at or subsequent to the Date...

  • Page 164
    ...seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses, as incurred by the Company, the Executive and others...

  • Page 165
    ... a firm of independent public accountants selected by Group prior to the Change of Control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within five (5) business days of the Date of Termination, or such earlier time as is requested...

  • Page 166
    ...tax return would not result in the imposition of a negligence or other penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at the time...

  • Page 167
    ...in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any...

  • Page 168
    .... The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to Group, the Company or any of their subsidiaries, and their respective businesses, which shall have been obtained by the Executive's employment by...

  • Page 169
    ... and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to...

  • Page 170
    ... 3668 Grandin Road Cincinnati, Ohio 45226 If to the Company: US Airways, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Attention: President and Chief Executive Officer - and Senior Vice President, Employee Relations or to such other address as either party shall have furnished to the other in...

  • Page 171
    ... Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. EXECUTIVE /s/ Elizabeth K. Lanier Elizabeth K. Lanier US AIRWAYS, INC. /s/ Jerrold A. Glass Jerrold A. Glass Senior Vice President, Employee Relations...

  • Page 172
    ... Change of Control, and to provide the Executive with compensation and benefits arrangements upon a severance of employment which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order...

  • Page 173
    ... and if the Executive's employment with the Company is terminated or the Executive ceases to be an officer of the Company prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment or cessation of status as an...

  • Page 174
    ...of Control Date, the Employment Period shall automatically be extended so as to terminate on the earlier to occur of (1) the third anniversary of such date or (2) the Executive's Normal Retirement Date. (e) "Key Employee" shall mean a senior vice president level employee of the Company. 2. Change of...

  • Page 175
    ... of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (v) any acquisition directly from Group, (w) any acquisition by Group or any of its subsidiaries, (x) any acquisition by any employee benefit plan...

  • Page 176
    ... Stock and Outstanding Group Voting Securities on Schedule 13D (or any successor Schedule) then, for purposes of this Section 2(a), such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so file...

  • Page 177
    ... Outstanding Group Common Stock and Outstanding Group Voting Securities, as the case may be. 3. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, during the Employment Period under the terms...

  • Page 178
    ...Effective Date, the Company's headquarters, or a location where a substantial activity for which the Executive has responsibility is located. (ii) During the Employment Period and on and following a Change of Control Date, (A) the Executive's position (including status, offices, titles and reporting...

  • Page 179
    ... participate during the Change of Control Period in all incentive (including but not limited to the Long Term Incentive Plan and all stock incentive plans), savings and retirement plans, practices, policies and programs applicable to other Key Employees, in each case providing benefits which are at...

  • Page 180
    ... the Change of Control Period, the Executive shall be entitled to fringe benefits, including but not limited to space positive and space available travel privileges in all classes of service and cabins on all air carriers owned by the Company and any of its affiliates (including all carriers owned...

  • Page 181
    ..., "Good Reason" means: (i) with respect to the termination of the Executive's employment other than during the Change of Control Period: (1) any reduction by the Company of the Executive's rate of base salary, as in effect on the Effective Date or as the same may be increased from time to time; 10

  • Page 182
    ... by the Executive; any demotion of the Executive to a position lower than Senior Vice President; or any failure by the Company to comply with and satisfy Section 11(c) of this Agreement, and (3) (4) (ii) with respect to the termination of the Executive's employment during the Change of Control...

  • Page 183
    ... immediately preceding the Change of Control Date, or if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other Key Employees; (3) (4) (5) the Company's requiring the Executive to be based at any office or location other than that...

  • Page 184
    ... the Change of Control Period ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for...

  • Page 185
    ... dispute was given (including, but not limited to, Base Salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in...

  • Page 186
    ...the contrary notwithstanding, the Executive's family shall be entitled to receive benefits in accordance with the most favorable plans, programs, practices and policies of the Company and its subsidiaries in effect during the 90-day period immediately preceding the Change of Control Date, or if more...

  • Page 187
    ... disability and other benefits in accordance with the most favorable plans, programs, practices and policies of the Company and its subsidiaries in effect during the 90-day period immediately preceding the Change of Control Date, or if more favorable to the Executive and/or the Executive's family...

  • Page 188
    ... to a Change of Control, the Company shall terminate the Executive's employment other than for Cause, Disability or death or if the Executive shall terminate his employment for Good Reason, the Executive shall be entitled to: A. to the extent not theretofore paid, the Executive's annual rate of base...

  • Page 189
    ... and on and after a Change of Control Date, the Company shall terminate the Executive's employment other than for Cause, Disability, or death or if the Executive shall terminate his employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the...

  • Page 190
    ... pay not yet paid by the Company; and C. D. (ii) The Company shall: A. for a period of three years following the Date of Termination or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to the Executive and/or the Executive's family...

  • Page 191
    ...restricted stock or other agreements with Group, the Company or any of its subsidiaries. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any Plan, policy, practice or program of Group, the Company or any of its subsidiaries at or subsequent to the Date...

  • Page 192
    ... no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Company agrees to pay, to the full extent permitted by law (a) all legal fees and expenses, as...

  • Page 193
    ... Gross-Up Payment, shall be made by a firm of independent public accountants selected by Group prior to the Change of Control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice...

  • Page 194
    ...tax return would not result in the imposition of a negligence or other penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at the time...

  • Page 195
    ...in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any...

  • Page 196
    ... that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including...

  • Page 197
    .... The Executive shall hold in a fiduciary capacity for the benefit of the Company all confidential and proprietary information, relating to Group, the Company or any of their subsidiaries, and their respective businesses, which shall have been obtained by the Executive's employment by the Company or...

  • Page 198
    ... registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive Elizabeth K .Lanier 1505 Crystal Drive Arlington, VA 22227 If to the Company: US Airways, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Attention: General Counsel or to such other...

  • Page 199
    ... provision hereof. (f) Words or terms used in this Agreement which connote the masculine gender are deemed to apply equally to female executives. (g) This Agreement supersedes any prior employment agreement between the Company and the Executive, including but not limited to the Prior Agreement, and...

  • Page 200
    ... its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. EXECUTIVE /s/ Elizabeth K. Lanier Elizabeth K. Lanier US AIRWAYS, INC. /s/ Jennifer C. McGarey Jennifer C. McGarey Vice President, Deputy General...

  • Page 201
    ... Change of Control, and to provide the Executive with compensation and benefits arrangements upon a severance of employment which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order...

  • Page 202
    ... and if the Executive's employment with the Company is terminated or the Executive ceases to be an officer of the Company prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment or cessation of status as an...

  • Page 203
    ...of Control Date, the Employment Period shall automatically be extended so as to terminate on the earlier to occur of (1) the third anniversary of such date or (2) the Executive's Normal Retirement Date. (e) "Key Employee" shall mean a senior vice president level employee of the Company. 2. Change of...

  • Page 204
    ... of directors (the "Outstanding Group Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (v) any acquisition directly from Group, (w) any acquisition by Group or any of its subsidiaries, (x) any acquisition by any employee benefit plan...

  • Page 205
    ... Stock and Outstanding Group Voting Securities on Schedule 13D (or any successor Schedule) then, for purposes of this Section 2(a), such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so file...

  • Page 206
    ... Outstanding Group Common Stock and Outstanding Group Voting Securities, as the case may be. 3. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, during the Employment Period under the terms...

  • Page 207
    ...Effective Date, the Company's headquarters, or a location where a substantial activity for which the Executive has responsibility is located. (ii) During the Employment Period and on and following a Change of Control Date, (A) the Executive's position (including status, offices, titles and reporting...

  • Page 208
    ... participate during the Change of Control Period in all incentive (including but not limited to the Long Term Incentive Plan and all stock incentive plans), savings and retirement plans, practices, policies and programs applicable to other Key Employees, in each case providing benefits which are at...

  • Page 209
    ... the Change of Control Period, the Executive shall be entitled to fringe benefits, including but not limited to space positive and space available travel privileges in all classes of service and cabins on all air carriers owned by the Company and any of its affiliates (including all carriers owned...

  • Page 210
    ..., "Good Reason" means: (i) with respect to the termination of the Executive's employment other than during the Change of Control Period: (1) any reduction by the Company of the Executive's rate of base salary, as in effect on the Effective Date or as the same may be increased from time to time; 10

  • Page 211
    ... by the Executive; any demotion of the Executive to a position lower than Senior Vice President; or any failure by the Company to comply with and satisfy Section 11(c) of this Agreement, and (3) (4) (ii) with respect to the termination of the Executive's employment during the Change of Control...

  • Page 212
    ... immediately preceding the Change of Control Date, or if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other Key Employees; (3) (4) (5) the Company's requiring the Executive to be based at any office or location other than that...

  • Page 213
    ... the Change of Control Period ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for...

  • Page 214
    ... dispute was given (including, but not limited to, Base Salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in...

  • Page 215
    ...the contrary notwithstanding, the Executive's family shall be entitled to receive benefits in accordance with the most favorable plans, programs, practices and policies of the Company and its subsidiaries in effect during the 90-day period immediately preceding the Change of Control Date, or if more...

  • Page 216
    ... disability and other benefits in accordance with the most favorable plans, programs, practices and policies of the Company and its subsidiaries in effect during the 90-day period immediately preceding the Change of Control Date, or if more favorable to the Executive and/or the Executive's family...

  • Page 217
    ... to a Change of Control, the Company shall terminate the Executive's employment other than for Cause, Disability or death or if the Executive shall terminate his employment for Good Reason, the Executive shall be entitled to: A. to the extent not theretofore paid, the Executive's annual rate of base...

  • Page 218
    ... and on and after a Change of Control Date, the Company shall terminate the Executive's employment other than for Cause, Disability, or death or if the Executive shall terminate his employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the...

  • Page 219
    ... pay not yet paid by the Company; and C. D. (ii) The Company shall: A. for a period of three years following the Date of Termination or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to the Executive and/or the Executive's family...

  • Page 220
    ...restricted stock or other agreements with Group, the Company or any of its subsidiaries. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any Plan, policy, practice or program of Group, the Company or any of its subsidiaries at or subsequent to the Date...

  • Page 221
    ... no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Company agrees to pay, to the full extent permitted by law (a) all legal fees and expenses, as...

  • Page 222
    ... Gross-Up Payment, shall be made by a firm of independent public accountants selected by Group prior to the Change of Control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice...

  • Page 223
    ...tax return would not result in the imposition of a negligence or other penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at the time...

  • Page 224
    ...in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any...

  • Page 225
    .... The Executive shall hold in a fiduciary capacity for the benefit of the Company all confidential and proprietary information, relating to Group, the Company or any of their subsidiaries, and their respective businesses, which shall have been obtained by the Executive's employment by the Company or...

  • Page 226
    ... and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to...

  • Page 227
    ... registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive B. Ben Baldanza 1225 Stuart Robeson Drive McLean, VA 22101 If to the Company: US Airways, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Attention: General Counsel or to such other...

  • Page 228
    ... provision hereof. (f) Words or terms used in this Agreement which connote the masculine gender are deemed to apply equally to female executives. (g) This Agreement supersedes any prior employment agreement between the Company and the Executive, including but not limited to the Prior Agreement, and...

  • Page 229
    ... its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. EXECUTIVE /s/ B. Ben Baldanza B. Ben Baldanza US AIRWAYS, INC. /s/ Jennifer C. McGarey Jennifer C. McGarey Vice President, Deputy General Counsel...

  • Page 230
    ... as of March 31, 2003, to the Severance Agreement dated June 26, 2002, between US Airways, Inc. a Delaware corporation (the "Company"), and B. Ben Baldanza (the "Executive") is entered into as of the date first stated above. WHEREAS, the Company and the Executive have previously entered into the...

  • Page 231
    ... 5(d)(ii)(6): "(6) any relocation of the Company's corporate headquarters outside of the Washington, D.C. metropolitan area." EXECUTIVE /s/ B. Ben Baldanza B. Ben Baldanza US AIRWAYS, INC. By /s/ Jennifer C. McGarey Name: Jennifer C. McGarey Title: Vice President, Deputy General Counsel & Secretary

  • Page 232
    ...report dated March 12, 2004, relating to the consolidated balance sheets of US Airways, Inc. and subsidiary ("US Airways") as of December 31, 2003 (Successor Company) and 2002 (Predecessor Company), and the related consolidated statements of operations, stockholder's equity (deficit), and cash flows...

  • Page 233
    ..., place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of US Airways, Inc. for the fiscal year ended December 31, 2003, and any and all amendments thereto, and other documents in connection therewith and to file the same, with all exhibits thereto and other documents in...

  • Page 234
    /s/ John A. McKenna, Jr. John A. McKenna, Jr. Director /s/ Hans Mirka Hans Mirka Director /s/ William D. Pollock William D. Pollock Director /s/ Raymond W. Smith Raymond W. Smith Director /s/ William T. Stephens William T. Stephens Director

  • Page 235
    ...report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ David N. Siegel Name: David N. Siegel Title: President and Chief Executive Officer Date...

  • Page 236
    ... by this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has...

  • Page 237
    ... the Annual Report on Form 10-K of US Airways, Inc. (Company) for the annual period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (Report), David N. Siegel, as Chief Executive Officer of the Company, and Neal S. Cohen, as Chief Financial Officer of...