US Airways 2007 Annual Report Download - page 19

Table of Contents
US Airways Group could experience significant operating losses in the future.
Although US Airways Group reported operating profits in 2006 and in 2007, there is no guarantee of future profitability. There are
several reasons, including those addressed in these risk factors, why US Airways Group might fail to achieve profitability and might in
fact experience significant losses. In particular, the condition of the economy and historic high fuel prices have an impact on our
operating results, and overall worsening economic conditions increase the risk that we will experience losses.
Since early 2001, the U.S. airline industry's revenue performance has fallen short of what would have been expected based on
historical growth trends. This shortfall has been caused by a number of factors discussed in these risk factors.
Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations.
Relations between air carriers and labor unions in the United States are governed by the Railway Labor Act (the "RLA"). Under the
RLA, collective bargaining agreements generally contain "amendable dates" rather than expiration dates, and the RLA requires that a
carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy
series of bargaining processes overseen by the National Mediation Board. These processes do not apply to our current and ongoing
negotiations for post-merger integrated labor agreements, and this means unions may not lawfully engage in concerted refusals to work,
such as strikes, slow-downs, sick-outs or other similar activity. Nonetheless, there is a risk that disgruntled employees, either with or
without union involvement, could engage in one or more concerted refusals to work that could individually or collectively harm the
operation of the airline and impair its financial performance.
We rely heavily on automated systems to operate our business and any failure or disruption of these systems could harm our
business.
To operate our business, we depend on automated systems, including our computerized airline reservation systems, our flight
operations systems, our telecommunication systems and our websites. Our website and reservation systems must be able to accommodate
a high volume of traffic and deliver important flight information on a timely and reliable basis. Substantial or repeated website,
reservations systems or telecommunication systems failures could reduce the attractiveness of our services and could cause our customers
to purchase tickets from another airline.
The inability to maintain labor costs at competitive levels could harm our financial performance.
Our business plan includes assumptions about labor costs going forward. Currently, the labor costs of both US Airways and AWA
are very competitive and very similar; however, we cannot assure you that labor costs going forward will remain competitive, because
some of our agreements are amendable now and others may become amendable, because competitors may significantly reduce their labor
costs or because we may agree to higher-cost provisions in our current labor negotiations. Approximately 85% of the employees within
US Airways Group are represented for collective bargaining purposes by labor unions. In the United States, there are nine labor groups at
US Airways and AWA, and they are represented by five different unions. Some of these labor groups are fully integrated, but others,
including the pilots, flight attendants, mechanics, and fleet service agents, are not. There are also five labor groups represented by four
different unions at Piedmont, and five labor groups represented by five different unions at PSA. There are additional unionized groups of
US Airways employees abroad.
Some of our unions have brought and may continue to bring grievances to binding arbitration. Unions may also bring court actions
and may seek to compel us to engage in the bargaining processes where we believe we have no such obligation. If successful, there is a
risk these judicial or arbitral avenues could create additional costs that we did not anticipate.
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