US Airways 2004 Annual Report Download - page 20

Table of Contents
We rely heavily on automated systems to operate our business and any failure of these systems could harm our business.
We depend on automated systems to operate our business, including our computerized airline reservation system, our telecommunication systems and our
website. In 2004, approximately 96% of our tickets were issued electronically. Our website and reservation system must be able to accommodate a high
volume of traffic and deliver important flight information. Substantial or repeated website, reservations system or telecommunication systems failures could
reduce 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 conversion of outstanding securities could adversely affect our stock price and dilute
the ownership interests of existing stockholders.
Sales and potential sales of substantial amounts of our Class B common stock or securities exercisable for or into our Class B common stock in the public
market, or the perception that these sales could occur, could adversely affect the market price of our Class B common stock. A substantial number of
additional shares of our Class B common stock are issuable upon the conversion or exercise of outstanding securities. As of March 14, 2005, the outstanding
shares of our Class B common stock were subject to dilution by:
• 19,692,000 shares of Class B common stock that are issuable upon the exercise, at a price of $3.00 per share, of certain warrants issued in
connection with the government guaranteed loan, including 18,754,000 shares of Class B common stock issuable upon exercise of a warrant issued
to the Air Transportation Stabilization Board, or ATSB; and
• 9,615,245 shares of our Class B common stock that are issuable upon the exercise of outstanding options.
In addition, 859,117 shares of Class B common stock are issuable upon conversion of the outstanding shares of Holdings' Class A common stock held by
the TPG Stockholders (but subject to certain contractual restrictions on transfer), up to 8,095,842 shares of Holdings' Class B common stock are issuable upon
the exchange of AWA's 7.25% senior exchangeable notes due 2023 (which exchange may not occur until the trading price of Holdings' Class B common
stock reaches certain thresholds, or other triggering events occur) and up to approximately 9,400,000 shares of Holdings' Class B common stock are issuable
upon conversion of Holdings' 7.5% convertible senior notes due 2009. Holdings has registered either the issuance or resale of all of these shares, meaning that
upon exercise, exchange or conversion, as applicable, such shares could be sold in the public market at any time.
The conversion or exercise of some or all of these notes, warrants and options will dilute the ownership interests of existing stockholders and any sales in
the public market of our Class B common stock issuable upon such conversion or exercise could adversely affect prevailing market prices of our Class B
common stock. In addition, the existence of the notes, warrants and options may encourage short selling by market participants because conversion or exercise
of the notes or warrants could depress the price of our Class B common stock.
Provisions in our charter documents might deter acquisition bids for us.
Holdings' Certificate of Incorporation and Bylaws contain provisions that, among other things:
• authorize Holdings' board of directors to issue preferred stock ranking senior to our Class B common stock without any action on the part of the
stockholders;
• establish advance notice procedures for stockholder proposals, including nominations of directors, to be considered at stockholders' meetings;
• authorize Holdings' board of directors to fill vacancies on the board resulting from an increase in the authorized number of directors or any other
cause; and
• restrict the ability of stockholders to call special meetings of stockholders.
These provisions might make it more difficult for a third party to acquire us, even if doing so would benefit the stockholders.
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