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AMERICA WEST AIRLINES INC

10-K

Annual report pursuant to section 13 and 15(d)

Filed on 03/15/2005

Filed Period 12/31/2004

Page 1
AMERICA WEST AIRLINES INC 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/15/2005 Filed Period 12/31/2004

Page 2
... of June 30, 2004, there were 35,204,800 shares of America West Holdings Corporation Class B common stock, $.01 par value issued and outstanding. As of such date, based on the closing sales price as quoted by the New York Stock Exchange, 35,029,271 shares of Class B common stock, having an aggregate...

Page 3
...filed under the Securities Exchange Act of 1934 within 120 days of the end of America West Holdings Corporation's fiscal year ended December 31, 2004, are incorporated by reference into Part III of this Annual Report on Form 10-K. America West Airlines, Inc. meets the conditions set forth in General...

Page 4
... in the airline industry; the impact of changes in fuel prices; and â€¢ relations with unionized employees generally and the impact and outcome of labor negotiations. For additional discussion of these factors and other risks, see "Business - Risk Factors Relating to the Company and Industry...

Page 5
...in 2004. Based on 2004 operating revenues and available seat miles, or "ASMs", AWA is the eighth largest passenger airline and the second largest low cost carrier in the United States. AWA is the largest low-cost carrier that operates a hub-and-spoke network, with large hubs in both Phoenix, Arizona...

Page 6
... service and reliability initiatives. These initiatives make it easier and more convenient for customers to travel on AWA. â€¢ â€¢ Our "Buy on Board" meal program was expanded to all departure segments with a flight duration of 3 1/2 hours or greater. Our day of departure first class upgrade program...

Page 7
...service check-in represented nearly 50% of all boarding passes in stations with kiosks. Over the year we expanded the number of interline e-ticket agreements with other carriers from three (Continental, United and American Airlines) to five (now including Delta and Hawaiian). In early 2005, we added...

Page 8
... on the basis of pricing, scheduling (frequency and flight times), 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 and other services. We compete with all...

Page 9
... States airlines offer frequent flyer programs to encourage travel on their respective airlines and customer loyalty. AWA offers the FlightFund program, which allows members to earn mileage credit by flying AWA and America West Express, by flying on certain partner airlines and by using the services...

Page 10
... regional airline alliance with Mesa. For the years ended December 31, 2004, 2003 and 2002, total fuel expense for the Mesa alliance was $102.1 million, $61.2 million and $46.3 million, respectively. The price and supply of jet fuel are unpredictable and fluctuate based on events outside our control...

Page 11
...airlines in the United States are represented by labor unions. In addition, on August 18, 2004, the National Mediation Board certified the IBT as the collective bargaining representative for the Company's passenger service employees, which includes the Company's customer service agents, reservations...

Page 12
...an international departure and arrival tax of $14.10 (each way). The legislation also included a 7.5% excise tax on certain amounts paid to an air carrier for the right to provide mileage and similar awards (e.g., purchase of frequent flyer miles by a credit card company). As a result of competitive...

Page 13
... pass these additional costs on to passengers and the increase in costs could be material to AWA's financial condition and results of operations. Slot Restrictions At New York City's John F. Kennedy International Airport and LaGuardia Airport, and at Washington D.C.'s Ronald Reagan National Airport...

Page 14
... mandatory flight paths, runway restrictions and limits on the number of average daily departures, which limit the ability of air carriers to provide service to, or increase service at, such airports. AWA's Boeing 757-200s, Boeing 737-300s and Airbus A319s and A320s all comply with the current noise...

Page 15
...expenses associated with the fuel leak at Phoenix Sky Harbor International Airport will be material. The trend in environmental regulation is to increasingly place more restrictions and limitations on activities that may affect the environment and we expect that the costs of compliance will continue...

Page 16
.... Moreover, the terms of the government guaranteed loan restrict our ability to incur additional indebtedness or issue equity unless we use the proceeds of those transactions to repay the loan, require prepayment if our employee compensation costs exceed a certain threshold, require us to maintain...

Page 17
... with labor unions could divert management attention and disrupt operations and new collective bargaining agreements or amendments to existing collective bargaining agreements could increase our labor costs and operating expenses. Some of our employees are represented by unions and other groups of...

Page 18
... pricing, scheduling (frequency and flight times), 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 and other services. We compete with other low cost carriers...

Page 19
... harm our financial condition and results of operations. Like other airlines, our operations are subject to delays caused by factors beyond our control, including air traffic congestion at airports, adverse weather conditions and increased security measures, such as those required to be implemented...

Page 20
... the attractiveness of our services and could cause our customers to purchase tickets from another airline. Any disruption in these systems could result in the loss of important data, increase our expenses and generally harm our business. Shares of our Class B common stock issuable upon exercise or...

Page 21
... our operating results failing to meet the expectations of securities analysts or investors in any quarter; downward revisions in securities analysts' estimates; material announcements by us or our competitors; public sales of a substantial number of shares of our Class B common stock; governmental...

Page 22
... 1999, Mr. McClelland worked at Northwest Airlines, most recently as Senior Vice President - Finance and Controller. Joseph C. Beery, Age 42. Senior Vice President and Chief Information Officer of AWA. Mr. Beery joined AWA in 1999 as Senior Director - Business Technology Delivery. In July 2000, Mr...

Page 23
... forth, for the periods indicated, the high and low sales prices of the Class B common stock as reported on the New York Stock Exchange. Class B Common Stock High Low Year Ended December 31, 2004 First Quarter Second Quarter Third Quarter Fourth Quarter $ 13.6200 11.2400 9.1400 6.8600 $ 7.9200...

Page 24
...2, "Restatement of Previously Reported Amounts" in Notes to Consolidated Financial Statements. The 2004 results include a $16.3 million net credit associated with the termination of the rate per engine hour agreement with General Electric Engine Services for overhaul maintenance services on V2500-A1...

Page 25
...restatements. The Company concluded that these accounting errors were the result of deficiencies in its internal control over financial reporting, from the lack of effective reviews of hedge transaction documentation and of quarterly mark-tomarket accounting entries on open fuel hedging contracts by...

Page 26
... service amenities that the major airlines offer, such as first class seating, an award winning frequent flyer program, FlightFund, and assigned seating. We believe that leisure and business customers will continue to value the service of low cost carriers and that our full service amenities give us...

Page 27
... of the new fare structure, higher-cost competitors placed extremely low prices in our nonstop markets and Continental Airlines cancelled its long-standing code share and frequent flyer agreements with us. As a result of these actions, our year-over-year domestic unit revenue performance during 2002...

Page 28
..., recent fare initiatives by the major carriers may also cause a reduction in revenue per available seat mile. In 2004, we made loan repayments of approximately $85.8 million on the government guaranteed loan and payments of approximately $168.5 million in respect to our off-balance sheet aircraft...

Page 29
... received under the Air Transportation Safety and System Stabilization Act in 2002. AWA did not record an income tax benefit for the year ended December 31, 2004 as it currently expects to continue to record a full valuation allowance on any future tax benefits until it has achieved several quarters...

Page 30
... total available seat miles. Total revenue per available seat mile - Total operating revenues divided by total available seat miles. The table below sets forth the major components of CASM for AWA for the applicable years. Percent Change 2004-2003 Percent Change 2003-2002 2004 Year Ended December...

Page 31
... and lower benefit costs. ASMs increased 8.1% and average fulltime equivalent employees ("FTEs") decreased 2.2%. This increase in productivity was offset in part by a $26.5 million increase in pilot payroll expense principally as a result of the new labor agreement with the Air Line Pilots...

Page 32
... sales, service charges, America West Vacations net revenues and Mesa codeshare agreement revenues, increased $23.7 million (26.5%) due to increased net revenues from AWA's code sharing agreement with Mesa Airlines, higher excess baggage revenue and higher ticket refund and reissue penalty fees...

Page 33
...in part by increased credit card fees ($6.2 million). In addition, the 2003 period includes a $4.4 million gain related to the purchase and subsequent exchange of an A320 airframe and a $2.8 million credit related to the settlement of disputed billings under the Company's frequent flyer program. AWA...

Page 34
... of short-term investments totaling $269.4 million for both Holdings and AWA. Restricted cash increased by $2.2 million during 2004 compared to an increase of $23.9 million during 2003 primarily due to an increase in cash reserves required under an agreement for processing the Company's Visa and...

Page 35
... 1999, Series 1999 special facility revenue bonds ("new bonds") were issued by a municipality to fund the retirement of the Series 1994A bonds ("old bonds") and the construction of a new concourse with 14 gates at Terminal 4 in Phoenix Sky Harbor International Airport in support of AWA's strategic...

Page 36
... discount notes. The notes were issued by FTCHP at a discount pursuant to the terms of a senior secured term loan agreement among the Company, FTCHP, Heritage Bank, SSB, as administrative agent, Citibank, N.A., as the initial lender, and the other lenders from time to time party thereto. Citibank...

Page 37
... for the shares of class B common stock of Holdings in any fiscal quarter commencing after September 30, 2003, if, as of the last day of the preceding fiscal quarter, the closing sale price of the class B common stock for at least 20 trading days in a period of 30 consecutive trading days ending on...

Page 38
... purchase price of such notes may be paid in cash or class B common stock of Holdings, subject to certain restrictions. In addition, each holder may require AWA to purchase all or a portion of such holder's notes upon the occurrence of certain change of control events concerning AWA or Holdings. AWA...

Page 39
... the demand for air travel, which would reduce the amount of cash generated by operations. An increase in our costs, either due to an increase in borrowing costs caused by a reduction in our credit rating or a general increase in interest rates or due to an increase in the cost of fuel, maintenance...

Page 40
...air marshals on board certain flights, improving airline crew security training and expanding use of criminal background checks of employees. Implementation of these and other requirements of the ATSA resulted in increased costs for air carriers and may result in delays and disruptions to air travel...

Page 41
... air carrier for the right to provide mileage and similar awards (e.g., purchase of frequent flyer miles by a credit card company). As a result of competitive pressures, AWA and other airlines have been limited in their ability to pass on the cost of these taxes to passengers through fare increases...

Page 42
...our FlightFund program, such as hotels, car rental agencies and credit card companies. Transportation-related revenue from the sale of mileage credits is deferred and recognized when transportation is provided. A change to the estimated cost per mile, minimum award level, percentage of revenue to be...

Page 43
...of its total long-term debt. If interest rates increased 10% in 2004, the impact on the Company's results of operations would not be material. ITEM 8A. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - AMERICA WEST HOLDINGS CORPORATION Consolidated balance sheets of Holdings as of December...

Page 44
... U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of America West Holdings Corporation's internal control over financial reporting as of December 31, 2004, based...

Page 45
... material respects, the results of operations and cash flows of America West Holdings Corporation and its subsidiaries for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility...

Page 46
Table of Contents AMERICA WEST HOLDINGS CORPORATION Consolidated Balance Sheets December 31, 2004 and 2003 (in thousands except share data) 2004 2003 (as restated-See Note 2) Assets Current assets: Cash and cash equivalents Short-term investments Restricted cash Accounts receivable, less allowance...

Page 47
... AMERICA WEST HOLDINGS CORPORATION Consolidated Statements of Operations For the Years Ended December 31, 2004, 2003 and 2002 (in thousands except per share data) 2004 2003 2002 Operating revenues: Passenger Cargo Other Total operating revenues Operating expenses: Salaries and related costs...

Page 48
... issue costs and guarantee fees Amortization of bond discount Amortization of investment discount and premium, net Special charges, net Gain on sale of investment Cumulative effect of change in accounting principle Other Changes in operating assets and liabilities: Decrease (increase) in restricted...

Page 49
...comprehensive income (loss): Changes in the fair value of derivative financial instruments, net of tax Total comprehensive income (loss) Issuance of warrants to purchase Class B common stock Cancellation of 15,166 shares of Class B common stock issued as restricted stock Balance at December 31, 2002...

Page 50
... America West Holdings Corporation ("Holdings" or the "Company") is a holding company that owns all of the stock of America West Airlines, Inc. ("AWA" or the "Airline"). AWA accounted for most of the Company's revenues and expenses in 2004. Based on 2004 operating revenues and available seat miles...

Page 51
... AMERICA WEST HOLDINGS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired as defined by Statement of Financial Accounting Standards...

Page 52
... and Awards." The Company accounts for its stock option plans in accordance with the provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of...

Page 53
... The Company reclassified amounts related to settled fuel hedge transactions and mark-to-market adjustments on open hedge instruments from "Aircraft Fuel" expense to "Gain (Loss) on Derivative Instruments, Net" in the accompanying consolidated statement of operations. In fiscal years 2004 and...

Page 54
... May 2000, Holdings completed the sale of a majority interest in The Leisure Company, ("TLC"), currently operating as a division in AWA as America West Vacations, retail operations, National Leisure Group and The Vacation Store, to Softbank Capital Partners and General Catalyst LLC. TLC received $52...

Page 55
...approximate market interest rates for similar debt instruments. The fair values of the Company's other long-term debt are determined based on quoted market prices if available or market prices for comparable debt instruments. (b) Fuel Price Risk Management Under its fuel hedging program, the Company...

Page 56
... discount notes. The notes were issued by FTCHP at a discount pursuant to the terms of a senior secured term loan agreement among the Company, FTCHP, Heritage Bank, SSB, as administrative agent, Citibank, N.A., as the initial lender, and the other lenders from time to time party thereto. Citibank...

Page 57
... at any time before January 18, 2005, at a redemption price equal to $1,000 per note to be redeemed if (A) the closing price of the class B common stock has exceeded 120% of the conversion price then in effect for at least 20 trading days within a period of 30 consecutive trading days ending on the...

Page 58
... for the shares of class B common stock of Holdings in any fiscal quarter commencing after September 30, 2003, if, as of the last day of the preceding fiscal quarter, the closing sale price of the class B common stock for at least 20 trading days in a period of 30 consecutive trading days ending on...

Page 59
... of the Company's long-term debt agreements contain minimum cash balance requirements and other covenants with which Holdings and AWA are in compliance. Certain of these covenants restrict the Company's ability to pay cash dividends on its common stock and make certain other restricted payments (as...

Page 60
...$409.4 million for the years ended December 31, 2004, 2003 and 2002, respectively. Collectively, the operating lease agreements require security deposits with lessors of $24.0 million, which have been classified as "Other Assets, Net" in the accompanying consolidated balance sheets, and bank letters...

Page 61
... changes in the delivery schedule of the equipment. (in thousands) 2005 2006 2007 (d) Sale-Leaseback Transactions $ $ 272,820 456,891 47,697 777,408 In the fourth quarter of 2004, the Company completed two separate aircraft sale-leaseback transactions on one Airbus A320 aircraft and one Airbus...

Page 62
Table of Contents AMERICA WEST HOLDINGS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (f) General Guarantees and Indemnifications The Company is the lessee under many aircraft financing agreements (including leveraged lease financings of aircraft under the pass through trusts) ...

Page 63
... stockholders except that voting rights of non-U.S. citizens are limited. The Class A common stock is convertible into an equal number of Class B shares at any time at the election of the holders of the Class A common stock. Holdings' Class B common stock is listed on the New York Stock Exchange. 60

Page 64
...money (based on the $5.55 per share closing price of the Company's Class B common stock as reported on the New York Stock Exchange on March 27, 2002) due to the significant drop in the price of the Company's stock during 2001 (largely as a result of the events of September 11, 2001 and its aftermath...

Page 65
... 563,000 shares of Class B common stock to members of the Board of Directors who are not employees of the Company. The options have a ten-year term and are exercisable six months after the date of grant. As of December 31, 2004, 409,000 options were outstanding and exercisable at prices ranging from...

Page 66
... which were operated by Chautauqua Airlines under the America West Express banner, have been phased out of the fleet. In addition, the hub has been downsized from 49 daily departures to 15 destinations to four flights per day to Phoenix and Las Vegas. Service to New York City La Guardia Airport was...

Page 67
... of Contents AMERICA WEST HOLDINGS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED In April 2003, as part of a cost reduction program, the Company implemented a plan to reduce management, professional and administrative payroll costs which resulted in 179 fewer employees within...

Page 68
...Pacific Group, American Airlines, Continental Airlines, Northwest Airlines, United Airlines, US Airways and AWA in October 2000. AWA had an ownership interest of approximately 1.5% in Hotwire.com with a carrying value of approximately $0.03 million. Upon closing of the transaction, AWA received cash...

Page 69
...Contents AMERICA WEST HOLDINGS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 13. Earnings (Loss) Per Share Year Ended December 31, 2004 2003 2002 (in thousands of dollars except per share data) BASIC EARNINGS (LOSS) PER SHARE Income (loss) before cumulative effect of change in...

Page 70
...reciprocal frequent flyer programs and ground handling operations. In March 2002, AWA received notice from Continental of its intention to terminate the code sharing and frequent flyer agreements between the two airlines, effective April 26, 2002. Two of Continental's directors are managing partners...

Page 71
... of Contents AMERICA WEST HOLDINGS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Summarized quarterly financial data for 2004 and 2003 follows (in thousands of dollars except per share amounts): 1st Quarter (as restated) (as previously reported) (as restated) 2nd Quarter (as...

Page 72
... of the quarterly earnings per share in 2004 and 2003 does not equal the total computed for the year. 17. Emergency Wartime Supplemental Appropriations Act In April 2003, the Senate and House of Representatives of the United States of America passed, and the President signed, the Emergency Wartime...

Page 73
...to the annual salary paid to that officer during the air carrier's fiscal year 2002. Any violation of this agreement would have required the carrier to repay to the government the amount reimbursed for airline security fees. Since AWA does not operate trans-Pacific or trans-Atlantic flights, AWA was...

Page 74
... DATA - AMERICA WEST AIRLINES, INC. ("AWA") Consolidated balance sheets of AWA as of December 31, 2004 and 2003, and the related consolidated statements of operations, cash flows and stockholder's equity and comprehensive income for each of the years in the three-year period ended December 31, 2004...

Page 75
..., in all material respects, the financial position of America West Airlines, Inc. and subsidiary as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. As discussed in Note...

Page 76
..., the results of operations and cash flows of America West Airlines, Inc. (a wholly-owned subsidiary of America West Holdings Corporation) for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are...

Page 77
Table of Contents AMERICA WEST AIRLINES, INC. Consolidated Balance Sheets December 31, 2004 and 2003 (in thousands except share data) 2004 2003 (as restated See Note 2) Assets Current assets: Cash and cash equivalents Short-term investments Restricted cash Accounts receivable, less allowance for ...

Page 78
Table of Contents AMERICA WEST AIRLINES, INC. Consolidated Statements of Operations For the Years Ended December 31, 2004, 2003 and 2002 (in thousands) 2004 2003 2002 Operating revenues: Passenger Cargo Other Total operating revenues Operating expenses: Salaries and related costs Aircraft rents ...

Page 79
...debt issue costs and guarantee fees Amortization of bond discount Amortization of investment discount and premium, net Gain on sale of investments Special charges, net Other Changes in operating assets and liabilities: Decrease (increase) in restricted cash Decrease (increase) in accounts receivable...

Page 80
...AMERICA WEST AIRLINES, INC. Consolidated Statements of Stockholder's Equity and Comprehensive Income For the Years Ended December 31, 2004, 2003 and 2002 (in thousands except share data) ACCUMULATED OTHER COMPREHENSIVE INCOME ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS/ (DEFICIT) TOTAL Balance...

Page 81
..., 2004, 2003 AND 2002 America West Airlines, Inc. ("AWA" or the "Airline") is a wholly owned subsidiary of America West Holdings Corporation ("Holdings" or the "Company"). AWA accounted for most of the Company's revenues and expenses in 2004. Based on 2004 operating revenues and available seat miles...

Page 82
... Frequent Flyer Awards AWA maintains a frequent travel award program known as "FlightFund" that provides a variety of awards to program members based on accumulated mileage. The estimated cost of providing the free travel, using the incremental cost method as adjusted for estimated redemption rates...

Page 83
... Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. Accordingly, no compensation cost has been recognized...

Page 84
... U.S. generally accepted accounting principles. Accordingly, management concluded that the financial statements for prior periods required restatement to reflect the fair value of fuel hedging contracts in the balance sheets and statements of stockholders equity and comprehensive income of Holdings...

Page 85
... rate terms that approximate market interest rates for similar debt instruments. The fair values of AWA's other longterm debt are determined based on quoted market prices if available or market prices for comparable debt instruments. (b) Fuel Price Risk Management Under its fuel hedging program...

Page 86
... AMERICA WEST AIRLINES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 5. Advances to Parent Company and Affiliate In January 2002, AWA closed a $429 million loan supported by a $380 million government loan guarantee. The terms of this loan and AWA's secured term loan restrict Holdings...

Page 87
... the assets from which such proceeds are derived. In addition, AWA is required to prepay the government guaranteed loan upon a change in control and we may be required to prepay portions of the loan if our employee compensation costs exceed a certain threshold. AWA may, at its option, prepay the...

Page 88
... for the shares of class B common stock of Holdings in any fiscal quarter commencing after September 30, 2003, if, as of the last day of the preceding fiscal quarter, the closing sale price of the class B common stock for at least 20 trading days in a period of 30 consecutive trading days ending on...

Page 89
... 10 trading-day period was less than 103% of the average exchange value for the notes during that period. Exchange value is equal to the product of the closing sale price for the shares of Class B common stock on a given day multiplied by the then current exchange rate, which is the number of shares...

Page 90
...and $409.4 million for the years ended December 31, 2004, 2003 and 200, respectively. Collectively, the operating lease agreements require security deposits with lessors of $24.0 million, which have been classified as "Other Assets, Net" in the accompanying balance sheets, and bank letters of credit...

Page 91
... and changes in the delivery schedule of the equipment. (in thousands) 2005 2006 2007 (d) Sale-Leaseback Transactions $ $ 272,820 456,891 47,697 777,408 In the fourth quarter of 2004, AWA completed two separate aircraft sale-leaseback transactions on one Airbus A320 aircraft and one Airbus A319...

Page 92
...included in Holdings' consolidated income tax return. Income tax expense in the accompanying statements of operations has been determined on a separate company basis. AWA recorded income tax expense (benefit) as follows: Year Ended December 31, 2003 (in thousands) 2004 2002 Current taxes: Federal...

Page 93
... of Contents AMERICA WEST AIRLINES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Income tax expense (benefit) differs from amounts computed at the federal statutory income tax rate as follows: Year Ended December 31, 2003 2002 (in thousands) 2004 Income tax expense (benefit) at the...

Page 94
...respectively. During the third quarter of 2004, Holdings became aware that an insufficient number of shares of its Class B common stock were registered for offer and sale through its 401(k) plan. In response to this registration shortfall, Holdings promptly filed a new registration statement on Form...

Page 95
... which were operated by Chautauqua Airlines under the America West Express banner, have been phased out of the fleet. In addition, the hub has been downsized from 49 daily departures to 15 destinations to four flights per day to Phoenix and Las Vegas. Service to New York City La Guardia Airport was...

Page 96
... of the United States of America passed, and the President signed, the Emergency Wartime Supplemental Appropriations Act to provide certain aviation-related assistance. $2.3 billion of the appropriation was for grants by the TSA to U.S. air carriers based on the proportional share each carrier had...

Page 97
...reciprocal frequent flyer programs and ground handling operations. In March 2002, AWA received notice from Continental of its intention to terminate the code sharing and frequent flyer agreements between the two airlines, effective April 26, 2002. Two of Continental's directors are managing partners...

Page 98
... reimbursement and expects to receive an additional $1.2 million in 2005. 15. Quarterly Financial Data (Unaudited) The 2004 and 2003 unaudited quarterly financial data has been restated to reflect the accounting for fuel hedging derivative instruments pursuant to management's determination that AWA...

Page 99
...to the annual salary paid to that officer during the air carrier's fiscal year 2002. Any violation of this agreement would have required the carrier to repay to the government the amount reimbursed for airline security fees. Since AWA does not operate trans-Pacific or trans-Atlantic flights, AWA was...

Page 100
... in Internal Control - Integrated Framework. Based on this assessment, management has concluded that as of December 31, 2004, the Company did not maintain effective internal control over financial reporting, due to a material weakness associated with the accounting for AWA's fuel hedging program, as...

Page 101
..."Company") and its subsidiary America West Airlines, Inc. (AWA) did not maintain effective internal control over financial reporting as of December 31, 2004, because of the effect of the material weakness identified in management's assessment associated with the Company's accounting for fuel hedging...

Page 102
...hedge accounting under U.S. generally accepted accounting principles and that the Company's financial statements for prior periods required restatement to reflect the fair value of fuel hedging contracts in the balance sheets and statements of stockholders equity and comprehensive income of Holdings...

Page 103
...Vice President - Technical Operations of AWA Senior Vice President - Public Affairs of Holdings and AWA Senior Vice President and Chief Financial Officer of Holdings and AWA Senior Vice President - Customer Service of AWA Senior Vice President and General Counsel of AWA Vice President and Controller...

Page 104
... officer, principal financial offer, principal accounting officer or controller, and persons performing similar functions, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form 8-K in accordance with applicable rules and regulations. Other information...

Page 105
...: America West Holdings Corporation Report of Independent Registered Public Accounting Firm - page 41. Report of Independent Registered Public Accounting Firm - page 42. Consolidated Balance Sheets - December 31, 2004 and 2003 - page 43. Consolidated Statements of Operations -Years ended December...

Page 106
...by reference to Exhibit 4.2 to Holdings' and AWA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. Registration Rights Agreement, dated as of July 30, 2003, with respect to shares of Class B Common Stock underlying the America West Airlines, Inc. Senior Exchangeable Notes due...

Page 107
...to Exhibit 4.16 to Holdings' and AWA's Current Report on Form 8-K dated January 31, 2002 (File Nos. 001-12649 and 000-12337). Registration Rights Agreement, dated January 18, 2002, with respect to shares of Class B Common Stock underlying the America West Holdings Corporation 7.5% Convertible Senior...

Page 108
...to Holdings' and AWA's Current Report on Form 8-K dated January 31, 2002 (File Nos. 001-12649 and 000-12337). Registration Rights Agreement, dated January 18, 2002, between America West Holdings Corporation and the Air Transportation Stabilization Board with respect to shares of Class B Common Stock...

Page 109
... quarter ended March 31, 2001 (File No. 000-12337). $429,000,000 Loan Agreement, dated as of January 18, 2002, among America West Airlines, Inc., Citibank, N.A., as Agent, KPMG Consulting, Inc., as Loan Administrator, Citibank, N.A., as Initial Lender and the Air Transportation Stabilization Board...

Page 110
... Class A Common Stock), dated as of January 18, 2002, among America West Holdings Corporation, TPG Partners, L.P., TPG Parallel I, L.P. and Air Partners II, L.P. for the benefit of the Air Transportation Stabilization Board - Incorporated by reference to Exhibit 10.53 to Holdings' and AWA's Current...

Page 111
... to Exhibit 10.14 to Holdings' and AWA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 001-12649). $30,790,000 Senior Secured Term Loan Agreement, dated December 23, 2004, among FTCHP LLC, as Borrower, America West Airlines, Inc., as Guarantor, Heritage Bank...

Page 112
...this Annual Report on Form 10-K may be filed, is included on the signature pages of this Annual Report on Form 10-K. Certification of Holdings' Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. Certification of Holdings' Chief Financial Officer...

Page 113
... this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICA WEST HOLDINGS CORPORATION Date: March 14, 2005 By: /s/ W. Douglas Parker W. Douglas Parker, Chairman, President and Chief Executive Officer POWER OF ATTORNEY We, the undersigned, directors and officers of...

Page 114
...report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICA WEST AIRLINES, INC. Date: March 14, 2005 By: /s/ W. Douglas Parker W. Douglas Parker, Chairman, President and Chief Executive Officer POWER OF ATTORNEY We, the undersigned, directors and officers of America West...

Page 115
... PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE The Board of Directors and Stockholders America West Holdings Corporation: The audits referred to in our report dated March 11, 2005 included the related consolidated financial statement schedule for the years ended December 31, 2004 and...

Page 116
Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of America West Holdings Corporation: Our audit of the consolidated financial statements of America West Holdings Corporation referred to in our report dated March 24,...

Page 117
... AMERICA WEST HOLDINGS CORPORATION Schedule II-Valuation and Qualifying Accounts For the Years Ended December 31, 2004, 2003 and 2002 (in thousands) Balance at Beginning of Period Balance at End of Period Description Additions Deductions Allowance for doubtful receivables: Year ended December...

Page 118
... REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE The Board of Directors and Stockholder America West Airlines, Inc.: The audits referred to in our report dated March 11, 2005 included the related consolidated financial statement schedule for the years ended December 31, 2004 and...

Page 119
Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of America West Airlines, Inc.: Our audit of the consolidated financial statements of America West Airlines, Inc. referred to in our report dated March 24, 2003, ...

Page 120
...AMERICA WEST AIRLINES, INC. Schedule II-Valuation and Qualifying Accounts For the Years Ended December 31, 2004, 2003 and 2002 (in thousands) Balance at Beginning Of Period Balance at End of Period Description Additions Deductions Allowance for doubtful receivables: Year ended December 31, 2004...

Page 121
...by reference to Exhibit 4.2 to Holdings' and AWA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. Registration Rights Agreement, dated as of July 30, 2003, with respect to shares of Class B Common Stock underlying the America West Airlines, Inc. Senior Exchangeable Notes due...

Page 122
... and Wilmington Trust Company, as Trustee and not in its individual capacity, for America West Holdings Corporation 7.5% Convertible Senior Notes due 2009 - Incorporated by reference to Exhibit 4.15 to Holdings' and AWA's Current Report on Form 8-K dated January 31, 2002 (File Nos. 001-12649...

Page 123
...to Holdings' and AWA's Current Report on Form 8-K dated January 31, 2002 (File Nos. 001-12649 and 000-12337). Registration Rights Agreement, dated January 18, 2002, between America West Holdings Corporation and the Air Transportation Stabilization Board with respect to shares of Class B Common Stock...

Page 124
...quarter ended September 30, 2004 (File No. 001-12649). Purchase Agreement, dated as of December 27, 2000, between Holdings, AWA and Continental Airlines, Inc., including Letter Agreement - Incorporated by reference to Exhibit 10.40 to Holdings' and AWA's Annual Report on Form 10-K for the year ended...

Page 125
... quarter ended March 31, 2001 (File No. 000-12337). $429,000,000 Loan Agreement, dated as of January 18, 2002, among America West Airlines, Inc., Citibank, N.A., as Agent, KPMG Consulting, Inc., as Loan Administrator, Citibank, N.A., as Initial Lender and the Air Transportation Stabilization Board...

Page 126
... to Exhibit 10.14 to Holdings' and AWA's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 001-12649). $30,790,000 Senior Secured Term Loan Agreement, dated December 23, 2004, among FTCHP LLC, as Borrower, America West Airlines, Inc., as Guarantor, Heritage Bank...

Page 127
...this Annual Report on Form 10-K may be filed, is included on the signature pages of this Annual Report on Form 10-K. Certification of Holdings' Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. Certification of Holdings' Chief Financial Officer...

Page 128

Page 129
EXHIBIT 3.2 BYLAWS OF AMERICA WEST AIRLINES, INC. AS AMENDED THROUGH JANUARY 20, 2005

Page 130
...3.09 3.10 3.11 Place of Meetings...Annual Meetings...Special Meetings...Action by Consent in Lieu of a Meeting...Notice of Meetings...Adjourned Meetings...Quorum and Adjournment...Majority Vote Required...Manner of Voting...Proxies...Presiding Officer and Secretary... DIRECTORS...4.01 4.02 4.03 4.04...

Page 131
...Executive Committee...Joint Meetings...PAGE 6 6 6 7 7 8 8 8 9 9 9 9 9 9 10 10 10 11 11 11 11 11 11 12 12 12 12 13 13 14 OFFICERS...Number...Election of Officers, Qualification and Term...Removal...Resignations...Vacancies...Salaries...The Chairman of the Board...The President...The Vice Presidents...

Page 132
...Section 7.05 Foreign Stock Record...Suspension of Voting Rights...Beneficial Ownership Inquiry...PAGE...Directors, Officers, Employees and Agents...Dividends...Execution of Deeds, Contracts and Other Agreements and Instruments...Checks...Voting Shares in Other Corporations...Fiscal Year...Gender/Number...

Page 133
..., the Corporation shall have a general office at Maricopa County, Arizona, and such other offices, either within or without the State of Delaware, at such locations as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II SEAL SECTION 2.01...

Page 134
... in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. SECTION 3.05...

Page 135
... The Board of Directors may, in advance of any annual or special meeting of the stockholders, prescribe additional regulations concerning the manner of execution and filing of proxies and the validation of the same, which are intended to be voted at any such meeting. SECTION 3.11 PRESIDING OFFICER...

Page 136
..., an increase in the authorized number of Directors or any other cause, the Board of Directors may, at any meeting, by resolution adopted by the affirmative vote of a majority of the Directors then in office, though less than a quorum, elect a Director to fill such vacancy. (b) If, as a result of...

Page 137
... 4.07 PRESIDING OFFICER AND SECRETARY. At each meeting of the Board of Directors, the Chairman of the Board shall preside, and the Secretary shall act as secretary of the meeting. SECTION 4.08 ANNUAL MEETINGS. The Board of Directors shall meet each year immediately following the annual meeting of...

Page 138
... these Restated Bylaws, each committee shall adopt its own rules governing the time, place and method of holding its meetings and the conduct of its proceedings and shall meet as provided by such rules or by resolution of the Board of Directors. Unless otherwise provided by these Restated Bylaws or...

Page 139
... Board of Directors, remove an officer elected by the Board of Directors, or raise or lower any officer's salary; or (g) declare dividends or authorize the issuance of stock. Meetings of the Executive Committee may be called at any time by the Chairman of the Board and shall be held at the general...

Page 140
...Chief Operating Officer. If at any time the offices of the Chairman of the Board and Chief Executive Officer shall not be filled, the President shall also be the Chief Executive Officer. (c) The Board of Directors may delegate to the Chief Executive Officer the power to appoint one or more employees...

Page 141
... to time by the Board of Directors. SECTION 5.08 THE PRESIDENT. In the event of the disability of the Chairman of the Board, the President shall have the powers and duties of the Chairman of the Board. The President shall serve as chief operating officer and shall have such other powers and perform...

Page 142
...Each Vice President shall have such powers and perform such duties as may from time to time be assigned to him or her by the Board of Directors, the Chairman of the Board or the President. SECTION 5.10 THE SECRETARY AND THE ASSISTANT SECRETARY. (a) The Secretary shall attend meetings of the Board of...

Page 143
... of the Chief Executive Officer and the Board of Directors, manage the day-to-day operations of the Corporation and, in general, shall assist the Chief Executive Officer. ARTICLE VI STOCK SECTION 6.01 CERTIFICATES. Certificates or shares of the stock of the Corporation shall be issued under the...

Page 144
... all such rules and regulations as it shall deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. (b) The Board of Directors may appoint and remove transfer agents and registrars of transfers, and may require all stock certificates to...

Page 145
... or not in connection with the issue and sale of any stock or other securities of the Corporation) warrants, rights or options entitling the holders thereof to purchase from the Corporation any shares of any class or classes or any other securities of the Corporation for such consideration and...

Page 146
... registration therein. SECTION 7.04 SUSPENSION OF VOTING RIGHTS. If at any time the number of shares of Stock known to the Corporation to be Owned or Controlled by Non-Citizens exceeds the Permitted Percentage, the voting rights of Stock Owned or Controlled by Non-Citizens and not registered on the...

Page 147
...) or any of them shall be open to the inspection of the stockholders and the stockholders' rights in respect thereof. SECTION 8.02 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. (a) The Corporation shall indemnify any person who was or is a company or is threatened to be made a party...

Page 148
...determination that indemnification of the Director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in subsection (a) or (b). Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum...

Page 149
... Board of Directors at any meeting thereof. (b) Dividends may be paid to stockholders in cash or, when the Directors shall so determine, in stock. A Director shall be fully protected in relying in good faith upon the books of account of the Corporation or statements prepared by any of its officers...

Page 150
... the stock issued and outstanding and entitled to vote at any meeting of stockholders or by resolution adopted by the affirmative vote of not less than a majority of the Directors in office at any annual or regular meeting of the Board of Directors or at any special meeting of the Board of Directors...

Page 151

Page 152
EXHIBIT 3.4 BYLAWS OF AMERICA WEST HOLDINGS CORPORATION AS AMENDED THROUGH JANUARY 20, 2005

Page 153
... VOTE REQUIRED...SECTION 3.10 MANNER OF VOTING...SECTION 3.11 PROXIES...SECTION 3.12 PRESIDING OFFICER AND SECRETARY...SECTION 3.13 DISREGARD OF NOMINATION OR PROPOSAL...SECTION 3.14 INSPECTIONS OF ELECTIONS...ARTICLE IV DIRECTORS...SECTION 4.01 POWERS...SECTION 4.02 NUMBER AND CLASSIFICATION...

Page 154
......SECTION 5.09 THE VICE PRESIDENTS...SECTION 5.10 THE SECRETARY AND THE ASSISTANT SECRETARY...SECTION 5.11 THE TREASURER AND THE ASSISTANT TREASURER...SECTION 5.12 TREASURER'S BOND...SECTION 5.13 CHIEF EXECUTIVE OFFICER...SECTION 5.14 CHIEF OPERATING OFFICER...ARTICLE VI STOCK...SECTION 6.01...

Page 155
TABLE OF CONTENTS (CONTINUED) SECTION 8.04 EXECUTION OF DEEDS, CONTRACTS, AND OTHER AGREEMENTS AND INSTRUMENTS...SECTION 8.05 CHECKS...SECTION 8.06 VOTING SHARES IN OTHER CORPORATIONS...SECTION 8.07 FISCAL YEAR...SECTION 8.08 GENDER/NUMBER...SECTION 8.09 PARAGRAPH TITLES...SECTION 8.10 AMENDMENT......

Page 156
... OF AMERICA WEST HOLDINGS CORPORATION ARTICLE I OFFICES In addition to its registered office in the state of Delaware, the Corporation shall have a general office at Maricopa County, Arizona, and such other offices, either within or without the State of Delaware, at such locations as the Board of...

Page 157
... brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than 60 days nor 2.

Page 158
... the date of the scheduled annual meeting is given or made, notice by the stockholder to be timely must be so delivered or received no later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the scheduled annual meeting was mailed or the...

Page 159
... The Board of Directors may, in advance of any annual or special meeting of the stockholders, prescribe additional regulations concerning the manner of execution and filing of proxies and the validation of the same, which are intended to be voted at any such meeting. SECTION 3.12 PRESIDING OFFICER...

Page 160
... majority of the voting power of all the shares of stock issued and outstanding and entitled to vote thereat, be removed from office with or without cause, and the successor of the Director so removed may be elected at such meeting. Stockholders shall have the right to act by written consent only in...

Page 161
... 4.07 PRESIDING OFFICER AND SECRETARY. At each meeting of the Board of Directors, the Chairman of the Board shall preside, and the Secretary shall act as secretary of the meeting. SECTION 4.08 ANNUAL MEETINGS. The Board of Directors shall meet each year immediately following the annual meeting of...

Page 162
...is present shall be the act of the Board of Directors or such committee, unless by express provision of law, of the Certificate of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control. In the absence of a quorum, a majority of the...

Page 163
... members the remaining members of the Executive Committee. The Executive Committee shall, to the full extent of the DGCL, have and may exercise in the intervals between meetings of the Board of Directors, all the powers of the whole Board of Directors in its management of the affairs and business of...

Page 164
... on the Board of Directors, officer elected by the Board of Directors, or raise or officer's salary; or (g) declare dividends or authorize the issuance of stock. Meetings of the Executive Committee may be called at any time by the Chairman of the Board and shall be held at the general office of the...

Page 165
... of the Corporation to be elected by the Board of Directors shall be elected annually at the first meeting of the Board of Directors held after each annual meeting of the stockholders. Each such officer shall hold office for one year and until a successor shall have been duly elected and shall...

Page 166
... of the Board. The President shall serve as chief operating officer and shall have such other powers and perform such other duties as may be delegated to him or her from time to time by the Board of Directors or the Chairman of the Board. SECTION 5.09 THE VICE PRESIDENTS. Each Vice President shall...

Page 167
... Board. SECTION 5.14 CHIEF OPERATING OFFICER. The Chief Operating Officer shall, subject to the supervision, direction and control of the Chief Executive Officer and the Board of Directors, manage the day-to-day operations of the Corporation and, in general, shall assist the Chief Executive Officer...

Page 168
... as they are issued. Each certificate shall bear a serial number, shall exhibit the holder's name and the number of shares evidenced thereby, and shall be signed by the Chairman of the Board or a Vice Chairman, if any, or the Chief Executive Officer or the President or any Vice President and the...

Page 169
... all such rules and regulations as it shall deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. (b) The Board of Directors may appoint and remove transfer agents and registrars of transfers, and may require all stock certificates to...

Page 170
... agent, trustee or representative of a Non-Citizen. (e) "Own or Control" or "Owned or Controlled" shall mean (i) ownership of record, (ii) beneficial ownership or (iii) the power to direct, by agreement, agency or in any other manner, the voting of Stock. Any determination by the Board of Directors...

Page 171
... registration therein. SECTION 7.04 SUSPENSION OF VOTING RIGHTS. If at any time the number of shares of Stock known to the Corporation to be Owned or Controlled by Non-Citizens exceeds the Permitted Percentage, the voting rights of Stock Owned or Controlled by Non-Citizens and not registered on the...

Page 172
... either within or without the State of Delaware as the Board of Directors may from time to time determine. (b) At least ten days before each meeting of stockholders, the officer in charge of the stock ledger of the Corporation shall prepare a complete list of the stockholders entitled to vote at the...

Page 173
...determination that indemnification of the Director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in subsection (a) or (b). Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum...

Page 174
... declared at the discretion of the Board of Directors at any meeting thereof. (b) Dividends may be paid to stockholders in cash or, when the Directors shall so determine, in stock. A Director shall be fully protected in relying in good faith upon the books of account of the Corporation or statements...

Page 175
... the stock issued and outstanding and entitled to vote at any meeting of stockholders or by resolution adopted by the affirmative vote of not less than a majority of the Directors in office at any annual or regular meeting of the Board of Directors or at any special meeting of the Board of Directors...

Page 176
SECTION 8.11 CERTIFICATE OF INCORPORATION. Notwithstanding anything to the contrary contained herein, if any provision contained in these Bylaws is inconsistent with or conflicts with a provision of the Certificate of Incorporation, such provision of these Bylaws shall be superseded by the ...

Page 177

Page 178
....41 SENIOR SECURED TERM LOAN AGREEMENT among FTCHP LLC, Borrower and AMERICA WEST AIRLINES, INC., Guarantor and HERITAGE BANK, SSB, Administrative Agent and CITIBANK, N.A. AND THE LENDERS NAMED HEREIN, Lenders $30,790,000 TERM LOAN $35,988,000 STATED PRINCIPAL AMOUNT OF SENIOR SECURED DISCOUNT NOTES...

Page 179
... of Application...Sharing of Payments, Etc...Booking Borrowings...4 CHANGE IN CIRCUMSTANCES...Increased Cost and Reduced Return...Limitation on Types of Loans...Illegality...Treatment of Affected Loans...Compensation...Taxes...5 FEES...Treatment of Fees...Fees of Administrative Agent...6 SECURITY...

Page 180
...Collateral Accounts...9.16 Post-Closing Matters...SECTION 10 NEGATIVE COVENANTS...10.1 Debt...10.2 Guaranties...10.3 Transfers, Liens, and Related Matters...10.4 Investments and Loans...10.5 Restricted Junior Payments...10.6 Restriction on Fundamental Changes...10.7 Transactions with Affiliates...10...

Page 181
...SECTION 11DEFAULT, RIGHTS, AND REMEDIES...11.1 Event of Default...11.2 Remedies Upon Default...11.3 Borrower Waivers...11.4 Performance by Administrative Agent...11.5 Delegation of Duties; Reliance...11.6 Not in Control...11.7 Course of Dealing...11.8 Cumulative Rights...11.9 Application of Proceeds...

Page 182
... Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule 1A 1B 2.1 2.2 7.1 8.1 8.5 8.11 8.20 9.16 10.1(c) 10.1(d) 10.4 Mortgaged Property Other Liens Lenders Pro Rata Loan Proceeds Amounts Principal Amount of Senior Secured Discount Notes Conditions Precedent to Closing...

Page 183
SENIOR SECURED TERM LOAN THIS SENIOR SECURED TERM LOAN AGREEMENT (this "AGREEMENT"), is entered into as of December 23, 2004, among FTCHP LLC, a Delaware limited liability company (the "BORROWER"), America West Airlines, Inc. (the "GUARANTOR"), Citibank, N.A. (the "INITIAL LENDER"), the Lenders (as ...

Page 184
... this Senior Secured Term Loan Agreement (as the same may hereafter be amended, modified, supplemented, or restated from time to time). ANNIVERSARY DATE means the annually recurring date that is twelve (12) months from the Closing Date. APPLICABLE BASE RATE means, from day to day, the Base Rate plus...

Page 185
... institutions are required or authorized by Law to be closed in Dallas, Texas, Phoenix, Arizona, or New York, New York, and (b) in addition to the foregoing, in respect of any Eurodollar Rate Borrowing, a day on which dealings in United States dollars are conducted in the London interbank market and...

Page 186
... CLOSING DATE means the date upon which this Agreement has been executed by Borrower, Lenders, and Administrative Agent and all conditions precedent specified in SECTION 7 have been satisfied or waived. CODE means the Internal Revenue Code of 1986, as amended, together with the rules and regulations...

Page 187
... laws from time to time in effect affecting the rights of creditors generally. DEFAULT is defined in SECTION 11. DEFAULT RATE means, (i) with respect to the Outstanding Note Balance, on any date, a per annum rate of interest equal from day to day to the non-Default interest rate applicable to the...

Page 188
... of any Hazardous Substance at the Mortgaged Property. ENVIRONMENTAL REQUIREMENT means any Environmental Law, agreement, permit, authorization, approval, identification number, license, notification, registration, order or restriction, applicable to the Borrower or Guarantor, in connection with the...

Page 189
... period ending on the last day of December in each year. GAAP means generally accepted accounting principles of the Accounting Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board which are applicable from time to time. GUARANTOR...

Page 190
... set of one or more circumstances or events which, individually or collectively, results in any (a) material adverse effect on the ability of Borrower or Guarantor, as applicable, to perform any obligations under any Loan Document or the ability of Administrative Agent or any Lender to enforce any...

Page 191
... which, after the giving of notice or lapse of time or both, would become a Default. PRO FORMA means the unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of the Closing Date after giving effect to the transactions contemplated by this Agreement. Senior Secured Term Loan 9

Page 192
... to acquire shares of any class of stock of Borrower; and (d) any payment by Borrower of any management, consulting, or similar fees to any Affiliate, whether pursuant to a management agreement or otherwise. RIGHTS means rights, remedies, powers, privileges, and benefits. Senior Secured Term Loan 10

Page 193
... any overhead that is shared with an affiliate, including, but not limited to, paying for shared office space and services performed by any officer or employee of an affiliate, (k) maintains a sufficient number of employees in light of its contemplated business operations, (l) conducts its business...

Page 194
... than 50% (in number of votes) of the stock, membership interests, or other equity interests is owned of record or beneficially, directly or indirectly, by such Person, or (b) any partnership (limited or general) of which such Person shall at any time be the controlling general partner determined in...

Page 195
..., of the financial covenants affected by such change. If Borrower and Required Lenders, despite good faith efforts, have not agreed on revised covenants within 30 days after delivery of such notice, then, for purposes of this Agreement, GAAP will mean generally accepted accounting principles on the...

Page 196
... to time and at any time, the Outstanding Note Balance on all outstanding Senior Secured Discount Notes; provided that: (A) such notice must be received by Administrative Agent by 12:00 p.m. central time, three Business Days preceding the date of prepayment, and (B) concurrently with the delivery of...

Page 197
..., the Outstanding Note Balance shall bear interest at the Applicable Eurodollar Rate, as adjusted every ninety (90) days, provided however, that the Applicable Base Rate shall apply when a Default exists. Each change in the Base Rate, subject to the terms of this Agreement, will become effective...

Page 198
... thereof and any Termination Fee payable as a result thereof, and (d) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the Obligation. However, if the Obligation is paid and performed in full prior to the end of the full contemplated...

Page 199
... or to reduce any sum received or receivable by such Lender under the Loan Documents with respect to any Eurodollar Rate Borrowing, then Borrower shall pay to such Lender on demand such amount or amounts as will compensate such Lender for such increased cost or reduction. Senior Secured Term Loan 17

Page 200
...on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Rate Borrowings, either prepay such Eurodollar Rate Borrowings or convert such Eurodollar Rate Borrowings into Base Rate Borrowings in accordance with the terms of this Agreement. 4.3 ILLEGALITY. Notwithstanding...

Page 201
... under any Loan Document to any Lender or Administrative Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this SECTION 4.6) such Lender or Administrative Agent receives an amount...

Page 202
...duly completed copies of Internal Revenue Service Form W-BEN, W-8ECI, W-8IMY, W-9, or other applicable form, as the case may be, certifying in each case that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax...

Page 203
... OF ADMINISTRATIVE AGENT. Borrower shall pay to Administrative Agent (for its own account) the fees described in that certain fee letter with Administrative Agent. SECTION 6 SECURITY. 6.1 COLLATERAL. To secure the full and complete payment and performance of the Obligation on the Closing Date, each...

Page 204
... or Guarantor. SECTION 7 CONDITIONS PRECEDENT TO CLOSING. 7.1 CONDITIONS PRECEDENT TO CLOSING. This Agreement shall not become effective, and Lenders shall not be obligated to advance any Loan Proceeds, unless all conditions precedent listed on SCHEDULE 7.1 have been completed to the satisfaction of...

Page 205
..., operations, or condition (financial or otherwise) of Guarantor or the Collateral, or in the facts and information regarding such entities or collateral as represented, which change may reasonably be expected to result in a Material Adverse Event. 8.5 DEBT AND LIABILITIES. As of the Closing Date...

Page 206
... other information as may be reasonably available to enable Administrative Agent and its counsel to evaluate such matter. 8.8 BROKER'S FEES. No broker's or finder's fee or commission will be payable with respect to this Agreement, other then those fees disclosed to Lender prior to the Closing Date...

Page 207
... If Borrower, or any of its Affiliates, employees, agents, or any other Persons acting for or in concert with Borrower, shall receive any monies, checks, notes, drafts, or any other payments relating to and/or proceeds of any Collateral, Borrower or such Person shall hold such instrument or funds in...

Page 208
... to Administrative Agent the funds deposited and to be deposited in each such Deposit Account. 8.21 ADDITIONAL ENVIRONMENTAL REPRESENTATIONS. (a) NOTICES. Except for such instances as would not result in a Material Adverse Event, neither Borrower nor Guarantor has received or has been required to...

Page 209
... documents as Administrative Agent at any time may reasonably request to evidence, perfect or otherwise implement the security for repayment of the Obligation provided for in the Loan Documents. 9.5 MORTGAGES; TITLE REPORTS. (a) Title Reports. Within 60 days following the Closing Date, Borrower...

Page 210
... stock within the meaning of Regulation U, or in any manner that might cause the Loan Proceeds or the application of such proceeds to violate Regulations T, U, or X, or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Act. 9.7 TERMINATION...

Page 211
... 9.11 NOTICE OF CLAIMS. Each of Borrower and Guarantor, as applicable, shall provide written notice to the Administrative Agent within 48 hours when either receives information in connection with the Mortgaged Property or other Collateral that could result in a Material Adverse Event arising from or...

Page 212
... Agent's satisfaction that necessary funds are available to pay the any costs pursuant to this SECTION 9.12 and of discharging any assessments which may be established on the Mortgaged Property as a result thereof. 9.13 BORROWER'S REMEDIAL ACTION. (a) VOLUNTARY REMEDIATION. In the event...

Page 213
..., Borrower covenants and agrees that Borrower will: (a) execute all documents and take any action required by Administrative Agent in order for Administrative Agent to obtain "control" (as defined in the UCC) with respect to Collateral consisting of Deposit Accounts, and Senior Secured Term Loan 31

Page 214
... to Administrative Agent, for the benefit of Lenders in and to, such Cash Collateral Account and all checks, drafts, and other items ever received by Borrower for deposit therein. Furthermore, if an Event of Default exists and is continuing, Administrative Agent shall have the right, at any time in...

Page 215
...indirectly by agreement to purchase the Debt of any other Person or through the purchase of goods, supplies, or services, or maintenance of working capital or other balance sheet covenants or conditions, or by way of stock purchase, capital contribution, advance, or loan for the purpose of paying or...

Page 216
... or indirectly, enter into or permit to exist any transaction (including the purchase, sale, or exchange of property or the rendering of any service) with any Affiliate or with any officer, director, or employee of Borrower, except for transactions in the ordinary course of business and upon fair...

Page 217
... Person, as applicable.. 10.18 TRANSACTIONS WITH AFFILIATES Directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, or exchange of property or the rendering of any service) with any Affiliate or with any officer, director, or employee of Guarantor, except...

Page 218
... any term contained in this Agreement other than those otherwise set forth in this SECTION 11.1 (or defaults in the performance of or compliance with any term contained in the other Loan Documents) and such default is not remedied or waived within 30 days after notice from Administrative Agent to...

Page 219
... in a Material Adverse Event; or (o) Material Adverse Event. Any change in Guarantor's business operations or Guarantor's use of the Mortgaged Properties which change may reasonably be expected to result in a Material Adverse Event; or (p) Termination of Lease. Termination or condemnation of any...

Page 220
... for such purposes); and (v) exercise any and all other legal or equitable Rights afforded by the Loan Documents, the Laws of the State of New York, or any other applicable jurisdiction as Administrative Agent or Required Lenders (as the case may be) shall deem appropriate, or otherwise, including...

Page 221
... the advice of such counsel, accountants, or experts. 11.6 NOT IN CONTROL. Nothing in any Loan Document shall, or shall be deemed to (a) give Administrative Agent or any Lender the Right to exercise control over the assets (including real property), affairs, or management of Borrower or Guarantor...

Page 222
...DEFEND, RELEASE, SAVE AND HOLD HARMLESS ADMINISTRATIVE AGENT, AND EACH LENDER, AND EACH OF THEIR RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES...

Page 223
...14; (v) all reasonable costs associated with claims for damages to persons, property or natural resources; and (vi) Indemnitees' reasonable attorneys' fees and consultants' fees and any court costs. Any Indemnitee, at its expense, may employ additional counsel of its choice to associate with counsel...

Page 224
... and/or Guarantor under this Agreement shall not include (a) any Environmental Claim arising or resulting from the activity of an Indemnitee (without contribution by Borrower and/or Guarantor or any affiliate, officer, director, employee, contractor or agent of Borrower and/or Guarantor) after...

Page 225
... possession or control of Administrative Agent or its Affiliates which may be or become security for the obligations of Borrower or Guarantor arising under the Loan Documents by reason of the general description of indebtedness secured or of property contained in any other agreements, documents, or...

Page 226
... limiting the generality of the foregoing, no Lender shall have any right of action against Administrative Agent as a result of Administrative Agent's acting or refraining from acting hereunder in accordance with the instructions of Required Lenders (or all Lenders if required in the Loan Documents...

Page 227
... until Administrative Agent shall have received instructions from Required Lenders. All Rights of action under the Loan Documents and all Rights to the ... Borrower or Guarantor, Administrative Agent is acting for the ratable benefit of each Lender. Any and all agreements to subordinate (whether made ...

Page 228
... through any Person who, at the time of the execution of a particular instrument, is an officer of Administrative Agent. The power of attorney conferred by this SECTION 12.6(f) is granted for valuable consideration and is coupled with an interest and is irrevocable so long as the Obligation, or any...

Page 229
... Business Day after delivery to such courier properly addressed; or (d) if by U.S. Mail, four (4) Business Days after depositing in the United States mail, with postage prepaid and properly addressed. If to Borrower/Guarantor America West Airlines, Inc. 111 W.Rio Salado Parkway Tempe, Arizona...

Page 230
... IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY BORROWER, GUARANTOR, ANY LENDER, AND/OR ADMINISTRATIVE AGENT (TOGETHER WITH ALL COMMITMENT LETTERS AND FEE LETTERS AS THEY RELATE TO THE PAYMENT OF FEES AFTER THE CLOSING DATE) REPRESENT THE FINAL AGREEMENT BETWEEN THE...

Page 231
... THE NONEXCLUSIVE JURISDICTION OF THE STATE (PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN THE STATE OF NEW YORK, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF...

Page 232
... the consent of such Lender, no Lender's "COMMITMENT PERCENTAGE" may be increased. (c) Any conflict or ambiguity between the terms and provisions of this Agreement and terms and provisions in any other Loan Document shall be controlled by the terms and provisions herein. (d) No course of dealing nor...

Page 233
...be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with SECTION 13.12(d). (c) Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at its office in Dallas, Texas a copy of each...

Page 234
... best efforts to keep confidential any non-public information delivered pursuant to the Loan Documents and identified as such by Borrower and not to disclose such information to Persons other than to: its respective Affiliates, officers, directors, and employees and in each case, on a need-to-know...

Page 235
..., fees, and other amounts of the Obligation then due and owing, except that SECTIONS 4, 11, and 13, and any other provisions under the Loan Documents expressly intended to survive by the terms hereof or by the terms of the applicable Loan Documents, shall survive such termination. If at any time any...

Page 236
...W. Rio Salado Parkway Tempe, Arizona 85281 Attn: Paul Lambert Telecopier: (480) 693-5932 Telephone:_____ With a copy to: America West Airlnies 111 W. Rio Salado Parkway Tempe, Arizona 85281 Attn: James Walsh, General Counsel Telecopier:_____ Telephone:_____ SIGNATURE PAGE TO SENIOR SECURED TERM LOAN

Page 237
... J. Kerr Senior Vice President and Chief Financial Officer Address for Borrower: America West Airlines, Inc. 111 W. Rio Salado Parkway Tempe, Arizona 85281 Attn: Paul Lambert Telecopier: (480) 693-5932 Telephone:_____ With a copy to: America West Airlnies 111 W. Rio Salado Parkway Tempe, Arizona...

Page 238
... By: /s/ Davis Deadman, CFA Name: Davis Deadman, CFA Title: Chief Executive Officer Address for Administrative Agent: Heritage Bank, SSB Two Galleria Tower, Suite 2220 13455 Noel Road Dallas, Texas ...Amiel Telecopier: (214) 200-0555 Telephone: (214) 651-5605 SIGNATURE PAGE TO SENIOR SECURED TERM LOAN

Page 239
INITIAL LENDER: CITIBANK, N.A., as Initial Lender By: /s/ Rosemary M. Bell Name: Rosemary M. Bell Title: Director & Vice President Address for Lender: Citibank, N.A. 390 Greenwich St. 1st Fl New York, NY 10013 Attn:_____ Telecopier:_____ Telephone:_____ SIGNATURE PAGE TO SENIOR SECURED TERM LOAN

Page 240
..., 15.92 feet; THENCE South 04 degrees 11 minutes 51 seconds West, 202.87 feet; THENCE South 50 degrees 38 minutes 15 seconds West, 61.83 feet to the TRUE POINT OF BEGINNING. (FTC - 91518) PARCEL NO. 2: That portion of Lot 9, PHOENIX SKY HARBOR CENTER PHASE I, according to Book 341 of Maps, page 37...

Page 241
...right-of-way line of Buckeye Road, a measured distance of 210.58 feet (South 89 degrees 42 minutes 12 seconds East, a distance of 210.46. feet of record) to the point of beginning. ACCESS PARCEL: That portion of Lot 9, PHOENIX SKY HARBOR...89 degrees 40 minutes 53 seconds West along the South line of ...

Page 242
... 07 seconds West, a distance of 585.78 fee to a 5/8 inch rebar with cap set for the corner in the Easterly right-of-way line of Sky Harbor Circle North, said point is the beginning of a non-tangent curve to the right; THENCE Northeasterly along the Easterly right-of-way line of Sky Harbor Circle...

Page 243
... Parcel (91518) That portion of Lot 9, PHOENIX SKY HARBOR CENTER PHASE I, according to Book 341 of Maps...right-of-way line of Sky Harbor Circle North and the West line of said Lot 9; THENCE North 00 degrees 00'22" West, along the West line of said Lot 9 and the Easterly right-of-way line of Sky Harbor...

Page 244
... of 125.19 feet of record) to a 5/8" Rebar with cap set for corner, said point is the beginning of a non-tangent curve to the right; THENCE Northeasterly along the West line of said Lot 9 and along the Easterly right-of-way line of Sky Harbor Circle North and along the arc of said curve to the...

Page 245
SCHEDULE 1B OTHER LIENS None.

Page 246
SCHEDULE 2.1 LENDERS PRO RATA LOAN PROCEEDS AMOUNTS Citibank, N.A. $30,790,000

Page 247
SCHEDULE 2.2 PRINCIPAL AMOUNT OF SENIOR SECURED DISCOUNT NOTES Stated Principal Amount at Maturity: Citibank, NA. Purchase Price: Citibank, NA. $35,988,000 $30,790,000

Page 248
... term "CURRENT DATE" means any date not more than 30 days prior to the Closing Date), issued by the appropriate governmental authority of the jurisdiction of organization of each Credit Party, and (b) one dated the Closing Date, executed by the President, Vice President, Treasurer, Chief Executive...

Page 249
... Account Control Agreements. An executed Deposit Account Control Agreement in favor of Administrative Agent. Leasehold Deed of Trust, Security Agreement and Financing Statement. Leasehold Deed of Trust, Security Agreement and Financing Statement executed by Borrower, as Grantor, for the benefit...

Page 250
... on the Closing Date. Consents, filings, etc. Evidence satisfactory to Administrative Agent and its counsel that each Credit Party has received all approvals, authorizations, consents, and waivers of any governmental authority or other Person necessary or appropriate for the execution, delivery, and...

Page 251
SCHEDULE 8.1 CAPITALIZATION OF BORROWER America West Airlines, Inc. 100%

Page 252
SCHEDULE 8.5 DEBT AND LIABILITIES None.

Page 253
SCHEDULE 8.11 COMPLIANCE WITH LAWS None.

Page 254
SCHEDULE 8.20 DEPOSIT ACCOUNT Operating Account: America West Airlines, FTCHP LLC 634912794 Restricted Account: America West Airlines, FTCHP LLC (Restricted) 1831160161

Page 255
... and America West Airlines, Inc., in a form reasonably satisfactory to Administrative Agent, on or before January 4, 2004. Waiver and Agreement by Heritage Bank, SSB, and Fidelity National Title Insurance Company, as trustee, in favor of Aviation Financial Services Inc., relating to flight simulator...

Page 256
SCHEDULE 10.1(c) EXISTING DEBT None.

Page 257
SCHEDULE 10.1(d) DEBT INCURRED WITH REFINANCING OF EXISTING MORTGAGES None.

Page 258
SCHEDULE 10.4 EXISTING INVESTMENTS AND LOANS

Page 259

Page 260
... 23, 2004 FOR VALUE RECEIVED, FTCHP LLC, a Delaware limited liability company ("MAKER"), hereby unconditionally promises to pay to the order of Citibank, N.A. ("PAYEE"), at the principal office of Heritage Bank, SSB, as Administrative Agent ("ADMINISTRATIVE AGENT") under the Loan Agreement (defined...

Page 261
... to Section 5-1401 of the New York substantive laws of the State of New York, principals that might otherwise apply, and United States of America, shall govern the and interpretation of this Note. General Obligations Law, the without regard to the choice of law the applicable federal laws of the...

Page 262

Page 263
...is executed as of December 23, 2004, by America West Airlines, Inc., a Delaware corporation ("GUARANTOR"), in favor of Citibank, N.A. ("LENDER"). A. FTCHP LLC ("BORROWER") may from time to time be indebted to Lender pursuant to that certain Senior Secured Term Loan Agreement ("LOAN AGREEMENT") dated...

Page 264
...Loan Agreement and does not receive payments or benefits thereon in the amounts and at the times required or provided by applicable agreements or laws, including any applicable...acceleration or any other notice whatsoever, pay in lawful money of the United States of America, the amount due on the ...

Page 265
... be deemed made, given and received in accordance with SECTION 14.2. 6. PAYMENT OF EXPENSES. In the event that Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantor shall, immediately upon demand by Lender, pay Lender all costs and expenses (including court...

Page 266
... Obligation. 10. FINANCIAL INFORMATION. Guarantor agrees to deliver to Lender current balance sheets and other financial information of Guarantor as shall be required by Lender, not later than forty-five (45) days after the end of each calendar quarter. 11. ADDITIONAL TERMS. Guarantor consents and...

Page 267
..., preservation, protection, enforcement, sale application, disposal or other handling or treatment of all or any part of Guaranteed Obligation or any collateral, property or security at any time securing any portion thereof, including, without limiting the generality of the foregoing, the failure...

Page 268
... to be taken with respect to the Loan Agreement, the Guaranteed Obligation, or the security and collateral therefor, whether or not such action or omission prejudices Guarantor or increases the likelihood or risk that Guarantor will be required to pay the Guaranteed Obligation; it is the unambiguous...

Page 269
... trust, security interest, collateral rights, judgments or other encumbrances on assets of Borrower held by Guarantor. 13.5 NOTATION OF RECORDS. Guarantor shall use reasonable efforts to ensure that all promissory notes, accounts receivable ledgers or other evidences of the Guarantor Claims accepted...

Page 270
... as follows: Guarantor: America West Airlines, Inc. 111 W. Rio Salado Parkway Tempe, Arizona 85281 Attn: Paul Lambert Facsimile: 480-693-5932 Telephone: 480-693-5773 With copy to: America West Airlines, Inc. 111 W. Rio Salado Parkway Tempe, Arizona 85281 Attn: James Walsh, General Counsel Facsimile...

Page 271
... Fl New York, NY 10013 Attn: Joe Shanahan Fax/Telecopy No.: (212) 816-5705 Any such notice or other communication shall be deemed to have been given (whether actually received or not) on the day it is personally delivered as aforesaid or, if mailed by express carrier, on the day it is received, or...

Page 272
provided under SECTION 6 hereof. 14.9 TIME OF THE ESSENCE. Time is of the essence of this Guaranty. 10

Page 273
EXECUTED as of the day and year first above written. GUARANTOR: America West Airlines, Inc. By: /s/ Derek J. Kerr Derek J. Kerr Senior Vice President and Chief Financial Officer

Page 274

Page 275
... at the stock's NYSE closing price on the date of the grant. You will be eligible for additional grants of stock options during your tenure with America West, however, all stock option awards are at the discretion of the Board of Directors. Stock options currently vest over a three-year schedule and...

Page 276
... any guaranteed duration of employment. If the terms set forth above are agreeable to you, please sign a copy of this letter in the space provided below and return it to Bonnie Thompson, Director, Recruitment. Members of the executive management at America West are unanimously impressed with...

Page 277

Page 278
...CONTROL AND SEVERANCE BENEFITS AGREEMENT (VICE PRESIDENTS AND OFFICERS OF EQUAL RANK) This EXECUTIVE CHANGE IN CONTROL AND SEVERANCE BENEFITS AGREEMENT (the "Agreement") is entered into as of the _____ day of _____, 2004 (the "Effective Date"), by and among _____ ("Executive"), AMERICA WEST HOLDINGS...

Page 279
... power) by any former executive officer(s) of Holdings either (a) acquires (directly or indirectly) the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the outstanding shares of Holdings Class A Common Stock, or (b) elects or appoints...

Page 280
... of Executive's pay, position, function, duties or responsibilities; provided, however, that such alteration shall cease to be a Good Reason ninety (90) days after the occurrence of such alteration unless prior to such date Executive has given written notice of termination to the Company on account...

Page 281
.... (B) ANNUAL BONUS. Executive shall receive an amount equal to either (i) 200% of Executive's target bonus under the Company's annual bonus program, if then in effect, for the year of such termination, or (ii) if such program is not then in effect and its suspension or termination constituted a Good...

Page 282
... termination. 2.3 FLIGHT PRIVILEGES. Executive shall be entitled to top priority, first class, positive space travel privileges, to be provided by AWA or, if AWA did not survive the Change in Control, by the airline which survived the Change in Control. The travel privileges would cover Executive...

Page 283
...the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control...

Page 284
...401(k) plan coverage) shall terminate as of Executive's termination date. 3.7 NON-DUPLICATION OF BENEFITS. Executive is not eligible to receive benefits under this Agreement more than one time. ARTICLE 4 TIME OF PAYMENT AND FORM OF BENEFIT 4.1 The Company reserves the right to determine in what form...

Page 285
... personal delivery by facsimile) or the third (3rd) day after mailing by first class mail, to the Company at its primary office location and to Executive at Executive's address as listed in the Company's payroll records. Any payments made by the Company to Executive under the terms of this Agreement...

Page 286
...extent that disclosure is mandated by applicable law, standard or required corporate reporting, or disclosure is made to the parties' respective advisors and agents (e.g., attorneys, accountants) or immediate family members. 5.12 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the text...

Page 287
... above. AMERICA WEST HOLDINGS CORPORATION By Name: Title: [EXECUTIVE NAME] Exhibit A: Release (Individual Termination - Age 40 or Older) Exhibit B: Release (Individual and Group Termination - Under Age 40) Exhibit C: Release (Group Termination - Age 40 or Older) 10. AMERICA WEST AIRLINES, INC...

Page 288
...and forever discharge the Company, its parents, subsidiaries and affiliates, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages...

Page 289
...execute this Release earlier); (D) I have seven (7) days following my execution of this Release to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8th) day after I execute this Release. [EXECUTIVE...

Page 290
...and forever discharge the Company, its parents, subsidiaries and affiliates, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages...

Page 291
...and forever discharge the Company, its parents, subsidiaries and affiliates, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages...

Page 292
... eighth day (8th) after I execute this Release; and (F) I have received with this Release a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company in the same job classification or organizational unit who...

Page 293

Page 294
... BENEFITS AGREEMENT (SENIOR VICE PRESIDENTS AND OFFICERS OF EQUAL OR HIGHER RANK) This EXECUTIVE CHANGE IN CONTROL AND SEVERANCE BENEFITS AGREEMENT (the "Agreement") is entered into as of the _____ day of _____ , 200_ (the "Effective Date"), by and among _____ ("Executive"), AMERICA WEST HOLDINGS...

Page 295
... power) by any former executive officer(s) of Holdings either (a) acquires (directly or indirectly) the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the outstanding shares of Holdings Class A Common Stock, or (b) elects or appoints...

Page 296
... of Executive's pay, position, function, duties or responsibilities; provided, however, that such alteration shall cease to be a Good Reason ninety (90) days after the occurrence of such alteration unless prior to such date Executive has given written notice of termination to the Company on account...

Page 297
... termination constituted a Good Reason basis for Executive's termination of employment, 200% of Executive's target bonus under such program immediately prior to its suspension or termination. (III) LONG TERM INCENTIVE PLAN. Executive shall receive in respect of the America West Airlines Performance...

Page 298
... Company shall not include any amounts payable by Executive under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of Executive. 2.2 BENEFITS UPON A CHANGE IN CONTROL. In the event of a Change in Control, Executive shall receive...

Page 299
...the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control...

Page 300
... personal delivery by facsimile) or the third (3rd) day after mailing by first class mail, to the Company at its primary office location and to Executive at Executive's address as listed in the Company's payroll records. Any payments made by the Company to Executive under the terms of this Agreement...

Page 301
...mutually agree not to disclose the terms of this Agreement except to the extent that disclosure is mandated by applicable law, standard or required corporate reporting, or disclosure is made to the parties' respective advisors and agents (e.g., attorneys, accountants) or immediate family members. 8.

Page 302
5.12 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control. 9.

Page 303
... above. AMERICA WEST HOLDINGS CORPORATION By Name: Title: [EXECUTIVE NAME] Exhibit A: Release (Individual Termination - Age 40 or Older) Exhibit B: Release (Individual and Group Termination - Under Age 40) Exhibit C: Release (Group Termination - Age 40 or Older) 10. AMERICA WEST AIRLINES, INC...

Page 304
...and forever discharge the Company, its parents, subsidiaries and affiliates, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages...

Page 305
...execute this Release earlier); (D) I have seven (7) days following my execution of this Release to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8th) day after I execute this Release. [EXECUTIVE...

Page 306
...and forever discharge the Company, its parents, subsidiaries and affiliates, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages...

Page 307
...and forever discharge the Company, its parents, subsidiaries and affiliates, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages...

Page 308
... eighth day (8th) after I execute this Release; and (F) I have received with this Release a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company in the same job classification or organizational unit who...

Page 309

Page 310
... on the value of travel benefits. 2. FINANCIAL ADVISORY AND TAX PREPARATION SERVICES. Financial advisory and tax preparation services are provided to officers of AWHC and AWA. Vice Presidents are eligible for reimbursement up to $3,500 annually and Senior Vice Presidents and above are eligible...

Page 311

Page 312
...employee directors receive an annual $20,000 retainer, $1,000 per meeting attended, $10,000 per year for chairing the Audit Committee and $4,000 per year for chairing all other Board committees. 2. FLIGHT BENEFITS FOR DIRECTORS. Positive-space travel on America West Airlines and America West Express...

Page 313

Page 314
..."BASE SALARY" shall have the meaning specified in Section 3.1. "BOARD" shall mean the Board of Directors of Holdings. "CEO" shall mean, when used with reference to any Constituent Company, the chief executive officer of such Constituent Company. "CHAIRMAN" shall mean, when used with reference to any...

Page 315
... power) by any former executive officer(s) of Holdings either (a) acquires (directly or indirectly) the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the outstanding shares of Holdings Class A Common Stock, or (b) elects or appoints...

Page 316
...continue unremedied for more than 30 days after written notice detailing such failure is given by Parker to Holdings; (iii) the relocation of the principal executive offices of an Employer outside the greater Phoenix, Arizona metropolitan area or an Employer's requiring Parker to be based other than...

Page 317
... required by Section 7.5(a), but only if such failure shall continue unremedied for more than 30 days after written notice detailing such failure is given by Parker to Holdings; (v) the failure of an Employer to elect or re-elect, or to appoint or re-appoint, Parker to the applicable offices...

Page 318
... 2 EMPLOYMENT; TERM; POSITIONS AND DUTIES 2.1 EMPLOYMENT; TERM Each Employer hereby employs Parker in the executive capacities set forth herein and Parker hereby accepts employment by each Employer, in each case on the terms and conditions, and for the consideration, set forth in this Agreement...

Page 319
... as Chairman, President and CEO. (e) During the Employment Period, the chief operating officer, the chief financial officer, the chief legal officer, the chief marketing officer and the chief public affairs officer of each of AWA and Holdings, respectively, and such other officers as the Board and...

Page 320
... eligible to receive in addition to the Base Salary an annual incentive compensation award (the "ANNUAL AWARD") for services rendered during such full or partial fiscal year, subject to the terms and conditions of the Employers' annual incentive compensation plan as in effect from time to time. The...

Page 321
... annual and long-term incentive compensation, commensurate with his status as the most senior executive officer of the Employers at such time or times as such awards are made to other senior executives of the Employers as a group (but excluding special grants associated with or attributable to new...

Page 322
... to their senior executives as a group, including, (i) participation in the various employee benefit plans or programs provided to senior executives of Employers in general (including life insurance and disability insurance programs), subject to meeting the eligibility requirements with respect to...

Page 323
... the termination is described in clause (i), (ii) or (iii) above, Employers promptly shall pay to Parker a severance payment (in cash or other immediately available funds) in an amount equal to two times the sum of (A) Parker's current Base Salary plus (B) the greater of (I) the average Annual Award...

Page 324
...) the target level Annual Award for the year in which the Termination Date occurs. (b) STOCK OPTIONS, STOCK APPRECIATION RIGHTS ETC. In the event the termination is described in clause (i), (ii), (iii) or (v) above, all outstanding stock options, stock appreciation rights, restricted stock and other...

Page 325
... travel privileges generally provided to the senior executives of such Employer from time to time. 4.5 RESIGNATION AS A DIRECTOR If Parker's employment under this Agreement is terminated for any reason, Parker agrees, if requested by the Board, to resign as a director of all Constituent Companies...

Page 326
... the Code exists to the contrary or a ruling is obtained from the Internal Revenue Service supporting a contrary view. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up...

Page 327
... becomes entitled to receive any refund with respect to such claim, Parker shall (subject to Holdings' complying with the requirements of Section 4.6(b)) promptly pay to Holdings the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after...

Page 328
...patent applications, procedures, manuals, confidential reports, financial information, business plans, prospects or opportunities of any Constituent Company; provided, however, that such term shall not include any information that (x) is or becomes generally known or available other than as a result...

Page 329
..., or statute (including any claims of breach or violation of statutory or common law protections from discrimination, harassment and hostile working environment), or concerning the interpretation, effect, termination, validity, performance and/or breach of this Agreement (a "DISPUTE"), shall to the...

Page 330
... party, and if so, to award to that prevailing party reimbursement for its reasonable attorneys' fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges, travel expenses, etc.). Holdings shall pay the costs of the arbitration, including the...

Page 331
.... Without limitation of the foregoing, Employers' obligations to make the payments to Parker required under this Agreement and otherwise to perform their obligations hereunder shall not be affected by any set off, counterclaim, recoupment, defense or other claim, right or action that either an may...

Page 332
...or assets as aforesaid which executes and delivers the Agreement provided for in this Section 7.5 or which otherwise becomes bound by all terms and provisions of this Agreement by operation of law. (b) This Agreement and all rights of Parker hereunder shall inure to the benefit of and be enforceable...

Page 333
... INSURANCE Parker shall be indemnified by the Employers to the full extent permitted by law and in accordance with the Employers' policies applicable to other senior executives and directors. In the event Holdings maintains directors and officers liability insurance, Parker will be insured under...

Page 334
... applicable to other senior executives and directors of Holdings. Without Parker's prior written consent, no Employer shall amend, modify or repeal any provision of its certificate of incorporation or bylaws if such amendment, modification or repeal would materially adversely affect Parker's rights...

Page 335
... executed this Agreement on February ____, 2004 but effective for all purposes (except as herein otherwise expressly provided) as of the date first above written. AMERICA WEST HOLDINGS CORPORATION /S/ W. DOUGLAS PARKER W. DOUGLAS PARKER By: /S/ WALTER T. KLENZ Name: Walter T. Klenz Title: Director...

Page 336
......Stock Incentive Awards...Other Incentive Compensation and Benefits...Life Insurance...Office Space; Staffing; Services...Business Expenses...Other Benefits...Attorneys' Fees...No Director Fees...CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT ...Termination by Parker...Termination by Holdings...

Page 337
...12 7.13 Choice of Arbitrators...Arbitration; Rules...Enforcement...Certain Court Actions Permitted...Waiver of Certain Rights and Protections...MISCELLANEOUS...No Mitigation or Set Off...Assignability...Notices...Severability...Successors; Binding Agreement...Tax Withholdings...Amendments...

Page 338
... JURISDICTION OF ORGANIZATION NAME PARENT LINE OF BUSINESS America West Airlines, Inc. AWHQ LLC FTCHP LLC Delaware Arizona Delaware America West Holdings Corporation America West Holdings Corporation America West Airlines, Inc. Airline Real estate holding company Real estate holding company

Page 339
... periods required restatement to reflect the fair value of fuel hedging contracts in the balance sheets and statements of stockholders equity and comprehensive income for Holdings and AWA. These accounting errors were the result of deficiencies in its internal control over financial reporting from...

Page 340
... No. 333-94361, No. 333-40486 and No. 333-89288) of America West Holdings Corporation of our reports dated March 24, 2003 relating to the consolidated financial statements and financial statement schedule of America West Holdings Corporation, which appear in this Form 10-K. We also hereby consent to...

Page 341
... and 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. Date: March 14, 2005 /s/ W. Douglas Parker W. Douglas Parker Chief Executive Officer

Page 342
..., summarize and 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. Date: March 14, 2005 /s/ Derek J. Kerr Derek J. Kerr Chief Financial Officer

Page 343
... and 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. Date: March 14, 2005 /s/ W. Douglas Parker W. Douglas Parker Chief Executive Officer

Page 344
..., summarize and 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. Date: March 14, 2005 /s/ Derek J. Kerr Derek J. Kerr Chief Financial Officer

Page 345
... Parker, the Chief Executive Officer of America West Holdings Corporation (the "Company") and Derek J. Kerr, the Chief Financial Officer of the Company, hereby certify that, to the best of their knowledge: 1.The Company's Annual Report on Form 10-K for the period ended December 31, 2004, to which...

Page 346
... the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 14th day of March 2005. /s/ W. Douglas Parker W. Douglas Parker Chief Executive Officer /s/ Derek...

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