US Airways 2008 Annual Report Download - page 22

Table of Contents
The integration of our business units following the merger continues to present significant challenges.
We continue to face significant challenges relating to our merger in consolidating functions and integrating diverse organizations,
information technology systems, processes, procedures, operations and training and maintenance programs, in a timely and efficient
manner. This integration has been and will continue to be costly, complex and time consuming. Failure to successfully complete the
integration may adversely affect our business and results from operations.
Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties
or decreased demand.
We have implemented several new measures designed to increase revenue and offset costs. These measures include charging
separately for services that had previously been included within the price of a ticket and increasing other pre-existing fees. We may
introduce additional initiatives in the future. The implementation of these initiatives creates logistical challenges that could harm the
operational performance of the airline. Also, the new and increased fees might reduce the demand for air travel on our airline or across
the industry in general, particularly as weakening economic conditions make our customers more sensitive to increased travel costs.
The airline industry is intensely competitive and dynamic.
Our competitors include other major domestic airlines as well as foreign, regional and new entrant airlines, some of which have
more financial resources or lower cost structures than ours, and other forms of transportation, including rail and private automobiles. In
many of our markets we compete with at least one low cost air carrier. Our revenues are sensitive to numerous factors, and the actions of
other carriers in the areas of pricing, scheduling and promotions can have a substantial adverse impact on overall industry revenues.
These factors may become even more significant in periods when the industry experiences large losses, as airlines under financial stress,
or in bankruptcy, may institute pricing structures intended to achieve near-term survival rather than long-term viability. In addition,
because a significant portion of our traffic is short-haul travel, we are more susceptible than other major airlines to competition from
surface transportation such as automobiles and trains.
Low cost carriers have a profound impact on industry revenues. Using the advantage of low unit costs, these carriers offer lower
fares, particularly those targeted at business passengers, in order to shift demand from larger, more-established airlines. Some low cost
carriers, which have cost structures lower than ours, have better financial performance and significant numbers of aircraft on order for
delivery in the next few years. These low-cost carriers are expected to continue to increase their market share through growth and could
continue to have an impact on the overall performance of US Airways Group.
Industry consolidation could weaken our competitive position.
If mergers or other forms of industry consolidation including antitrust immunity grants take place, we might or might not be
included as a participant. Depending on which carriers combine and which assets, if any, are sold or otherwise transferred to other
carriers in connection with such combinations, our competitive position relative to the post-combination carriers or other carriers that
obtain assets could be harmed. In addition, as carriers combine through traditional mergers or antitrust immunity grants, their route
networks might grow and result in greater overlap with our network, which in turn could result in lower overall market share and
revenues for us. Such consolidation is not limited to the U.S., but could include further consolidation among international carriers in
Europe and elsewhere.
The loss of key personnel upon whom we depend to operate our business or the inability to attract additional qualified personnel
could adversely affect the results of our operations or our financial performance.
We believe that our future success will depend in large part on our ability to attract and retain highly qualified management,
technical and other personnel, particularly in light of reductions in headcount associated with cost-saving measures implemented during
2008. We may not be successful in retaining key personnel or in attracting and retaining other highly qualified personnel. Any inability to
retain or attract significant numbers of qualified management and other personnel could adversely affect our business.
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