US Airways 2008 Annual Report Download - page 19

Table of Contents
the marketplace at the time of distribution. The effects of these distributions were reflected in US Airways' financial statements upon
emergence and will not have any further impact on the results of operations.
Item 1A. Risk Factors
Below are a series of risk factors that may affect our results of operations or financial performance. We caution the reader that these
risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to
time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of these risk factors on our business or the
extent to which any factor or combination of factors may impact our business.
Risk Factors Relating to the Company and Industry Related Risks
US Airways Group could experience significant operating losses in the future.
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 weakened condition of the economy and the high volatility of fuel prices
have had and continue to have an impact on our operating results, and overall worsening economic conditions increase the risk that we
will experience losses.
Our business may be adversely affected by a downturn in economic conditions.
Due to the discretionary nature of business and leisure travel spending, airline industry revenues are heavily influenced by the
condition of the U.S. economy and the economies in other regions of the world. Unfavorable conditions in these broader economies can
result in decreased passenger demand for air travel and changes in booking practices, both of which in turn can have a strong negative
effect on our revenues. In addition, during challenging economic times, actions by our competitors to increase their revenues can have an
adverse impact on our revenues. See "The airline industry is intensely competitive and dynamic" below. Certain contractual obligations
limit our ability to shrink the number of aircraft in operation below certain levels. As a result, we may not be able to optimize the number
of aircraft in operation compared to a decrease in passenger demand for air travel.
Increased costs of financing, a reduction in the availability of financing and fluctuations in interest rates could adversely affect our
liquidity, operating expenses and results.
Changes in the domestic and global financial markets may increase our costs and adversely affect our ability to obtain financing
needed for the acquisition of aircraft that we have contractual commitments to purchase and for other types of financings we may seek in
order to raise capital or fund other types of obligations. Any downgrades to our credit rating may likewise increase the cost and reduce
the availability of financings.
Further, a substantial portion of our indebtedness bears interest at fluctuating interest rates. These are primarily based on the London
interbank offered rate for deposits of U.S. dollars, or "LIBOR." LIBOR tends to fluctuate based on general economic conditions, general
interest rates, federal reserve rates and the supply of and demand for credit in the London interbank market. We have not hedged our
interest rate exposure and, accordingly, our interest expense for any particular period may fluctuate based on LIBOR and other variable
interest rates. To the extent these interest rates increase, our interest expense will increase, in which event we may have difficulties
making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be
adversely affected. See also the discussion of interest rate risk in Part II, Item 7A.
Our high level of fixed obligations limits our ability to fund general corporate requirements and obtain additional financing, limits
our flexibility in responding to competitive developments and increases our vulnerability to adverse economic and industry
conditions.
We have a significant amount of fixed obligations, including debt, aircraft leases and financings, aircraft purchase commitments,
leases and developments of airport and other facilities and other cash obligations. We also
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