US Airways 2010 Annual Report Download - page 8

Table of Contents
large jets. In addition, US Airways Express operators offer complementary service in our existing mainline markets by operating flights
during off-peak periods between mainline flights. During 2010, the US Airways Express network served 155 airports in the continental
United States, Canada and Mexico, including 75 airports also served by our mainline operation. During 2010, approximately 28 million
passengers boarded US Airways Express air carriers' planes, approximately 44% of whom connected to or from our mainline flights. Of
these 28 million passengers, approximately 8 million were enplaned by our wholly owned regional airlines Piedmont and PSA,
approximately 20 million were enplaned by third-party carriers operating under capacity purchase agreements and less than 1 million
were enplaned by carriers operating under prorate agreements, as described below.
The US Airways Express code share arrangements are in the form of either capacity purchase or prorate agreements. The capacity
purchase agreements provide that all revenues, including passenger, mail and freight revenues, go to us. In return, we agree to pay
predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on
board. In addition, these agreements provide that certain variable costs, such as airport landing fees and passenger liability insurance, will
be reimbursed 100% by us. We control marketing, scheduling, ticketing, pricing and seat inventories. Under the prorate agreements, the
prorate carriers receive a prorated share of ticket revenue and pay certain service fees to us. The prorate carrier is responsible for pricing
the local, point to point markets to the extent that we do not have competing existing service in that market. We are responsible for
pricing all other prorate carrier tickets. The prorate carrier is also responsible for all costs incurred operating the aircraft. Our prorate
carriers, Colgan Air, Inc. and Trans States Airlines, Inc., operated 10 turboprops and three regional jets, respectively, at December 31,
2010. All US Airways Express carriers have logos, service marks, aircraft paint schemes and uniforms similar to our mainline operation.
In January 2010, Mesa Air Group, Inc. and certain of its subsidiaries, including Mesa Airlines, Inc. ("Mesa"), filed voluntary petitions
for relief under Chapter 11 of the U.S. Bankruptcy Code. At December 31, 2010, Mesa operated 51 aircraft for our Express passenger
operations, representing over $500 million in annual passenger revenues to us in 2010. In November 2010, we signed an agreement for an
extension of 39 months on average from the current scheduled expiration of June 30, 2012, for the operation of 38 CRJ900 aircraft by
Mesa under the companies' codeshare and revenue sharing agreement, which agreement was approved by the U.S. Bankruptcy Court. The
remaining 13 aircraft were not extended. On January 20, 2011, the U.S. Bankruptcy Court approved the bankruptcy plan of Mesa Air
Group, Inc., who is expected to emerge from bankruptcy on or about February 28, 2011. For more discussion, see Part 1, Item 1A, "Risk
Factors – If we incur problems with any of our third-party regional operators or third-party service providers, our operations could be
adversely affected by a resulting decline in revenue or negative public perception about our services."
The following table sets forth our US Airways Express capacity purchase agreements and the number and type of aircraft operated
under those agreements at December 31, 2010.
Number and Type
Carrier of Aircraft
PSA (1) 49 regional jets
Piedmont (1) 44 turboprops
Air Wisconsin Airlines Corporation 70 regional jets
Republic Airline Inc. 58 regional jets
Mesa Airlines, Inc. 45 regional jets and 6 turboprops
Chautauqua Airlines, Inc. 9 regional jets
(1) PSA and Piedmont are wholly owned subsidiaries of US Airways Group.
Marketing and Alliance Agreements with Other Airlines
We maintain alliance agreements with several leading domestic and international carriers to give customers a greater choice of
destinations. Airline alliance agreements provide an array of benefits that vary by partner. By code sharing, each airline is able to offer
additional destinations to its customers under its flight designator code without materially increasing operating expenses and capital
expenditures. Through frequent flyer arrangements, members are provided with extended networks for earning and redeeming miles on
partner carriers. US Airways Club
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