US Airways 2003 Annual Report Download - page 7

Table of Contents
passengers (of these approximately 5.9 million passengers were enplaned by the Company's wholly owned regional airlines and 5.7 million passengers were
enplaned by third-party carriers operating under capacity purchase agreements and approximately 1.6 million passengers were enplaned by carriers operating
under "prorate" agreements – see below), approximately 50% of whom connected to the Company's flights. The Company uses its US Airways Express
operations to feed connecting traffic at its hubs from low density markets that are uneconomical for US Airways to serve with large jets. In addition, US
Airways Express operators offer complementary service in existing US Airways markets by operating flights during off-peak periods between US Airways
flights.
The US Airways Express code share arrangements are either in the form of a capacity purchase or a "prorate" agreement. Allegheny Airlines, Inc.
(Allegheny), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA), which are wholly owned subsidiaries of US Airways Group, and the regional
jet affiliate operators are capacity purchase relationships. The regional jet affiliates with a capacity purchase agreement are Chautauqua Airlines
(Chautauqua), Mesa Airlines, Inc. (Mesa), Trans States Airlines, Inc. (Trans States) and Midway Airlines Corporation (Midway) prior to Midway ceasing
service. The capacity purchase agreements provide that all revenues (passenger, mail and freight) go to US Airways. In return, US Airways agrees to pay
predetermined fees to such airlines for operating an agreed number of aircraft, 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 capacity purchase agreements have expirations from 2008 to 2013 and provide
for optional extensions at the Company's discretion. The carriers with a prorate agreement are non-owned turboprop operators and include all or a portion of
the turboprop operations of Colgan Airlines, Inc. (Colgan), Trans States, Shuttle Acquisition LLC (Shuttle America), and Air Midwest, Inc. (Air Midwest).
The prorate agreements provide for affiliate carriers to pay certain service fees to US Airways as well as a prorated share of revenue for connecting customers.
US Airways is responsible for pricing and marketing of connecting services to and from the prorate carrier. The prorate carrier is responsible for pricing and
marketing the local, 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 also has substantial operations at Boston's
Logan International Airport (Logan), New York's LaGuardia Airport (LaGuardia) and Washington's Ronald Reagan Washington National Airport (Reagan
National). Measured by departures, US Airways is among the largest at each of the foregoing airports. US Airways is also a leading airline from the Northeast
U.S. to Florida. US Airways' East coast-based hubs, combined with its strong presence at many East coast airports, have made it among the largest intra-East
coast carriers, comprising 29% of the industry's intra-East coast revenues based on the most recent industry revenue data available.
For the year ended December 31, 2003, passenger revenues accounted for 91% of the Company's consolidated operating revenues. Cargo revenues and
other sources accounted for 9% of the Company's consolidated operating revenues in 2003. The Company's results are seasonal with operating results
typically highest in the second and third quarters due to US Airways' combination of business traffic and North-South leisure traffic in the eastern U.S. during
those periods.
A copy of this annual report on Form 10-K, as well as other annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and amendments to those reports are accessible free of charge at investor.usairways.com/edgar.cfm as soon as reasonably possible after filed with or furnished
to the Securities and Exchange Commission.
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