US Airways 2009 Annual Report Download - page 7

Table of Contents
PART I
Item 1. Business
Overview
US Airways Group, a Delaware corporation, is a holding company whose primary business activity is the operation of a major network
air carrier through its wholly owned subsidiaries US Airways, Piedmont Airlines, Inc. ("Piedmont"), PSA Airlines, Inc. ("PSA"), Material
Services Company, Inc. ("MSC") and Airways Assurance Limited ("AAL"). MSC and AAL operate in support of our airline subsidiaries
in areas such as the procurement of aviation fuel and insurance. US Airways Group was formed in 1982, and its origins trace back to the
formation of All American Aviation in 1939. US Airways, a Delaware corporation, was formed in 1982. Effective upon US Airways
Group's emergence from bankruptcy on September 27, 2005, US Airways Group merged with America West Holdings Corporation
("America West Holdings"), with US Airways Group as the surviving corporation.
Our principal executive offices are located at 111 West Rio Salado Parkway, Tempe, Arizona 85281. Our telephone number is
[phone], and our internet address is www.usairways.com. Information contained on our website is not and should not be deemed a
part of this report or any other report or filing filed with or furnished to the Securities and Exchange Commission ("SEC").
Available Information
You may read and copy any materials US Airways Group or US Airways files with the SEC at the SEC's Public Reference Room at
100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. A copy of this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at
www.usairways.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
The U.S. Airline Industry
The airline industry in the United States was severely impacted in 2009 by the global economic recession. Passenger demand, as
reported by the Air Transport Association ("ATA"), declined severely in 2009 as compared to 2008. Despite capacity cuts put in place to
help offset the decline in demand for air travel, industry revenues were adversely affected by severe fare discounting by carriers to
stimulate demand. Business bookings, which typically drive stronger yields, declined sharply in 2009 as companies cut costs by reducing
their travel budgets in response to the economic recession. ATA reported yields for U.S. airlines declined by 13% in 2009 as compared to
2008 while U.S. airline passenger revenues were down 18% for fiscal year 2009, which represented the largest decline on record,
exceeding the 14% decline observed from 2000 to 2001.
International markets were more severely impacted by the economic slowdown than domestic markets. This was a result of
international traffic's greater reliance on business travel, particularly premium business and first class seating, to drive profitability.
Additionally, there was capacity expansion overseas during the past several years, which the U.S. industry reduced by only 6% in 2009 as
compared to domestic capacity reductions of 7%. The contraction of business spending also significantly impacted cargo demand.
During times of weak travel demand, falling fuel prices have historically served as a natural hedge. Although the price of crude oil was
down substantially in 2009 from its record high of $147 per barrel in July 2008, it remained volatile and did not fully offset the negative
economic impact to passenger demand. During 2009, the price of crude oil on a per barrel basis ranged from a high of $81.03 to a low of
$34.03, and closed at $79.39 on December 31, 2009. The volatility in oil prices made the use of hedging positions by airlines to contain
fuel costs either expensive (call options) or risky due to counterparty cash collateral requirements (collars and swaps).
Accordingly, in 2009 the industry focused on conserving and building cash and matching capacity to demand. In the latter part of
2009, credit and equity markets were increasingly open to airlines and several U.S. airlines raised
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