US Airways 2011 Annual Report Download - page 25

Table of Contents
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, however,
as time goes on, we expect that it will be more difficult to identify and implement additional initiatives. We cannot assure you that these new measures or any
future initiatives will be successful in increasing our revenues. Additionally, the implementation of these initiatives creates logistical challenges that could
harm the operational performance of our airline. Also, the new and increased fees might reduce the demand for air travel on our airline or across the industry
in general, particularly if weakened economic conditions continue to make our customers more sensitive to increased travel costs or provide a significant
competitive advantage to other carriers which determine not to institute similar charges.
The airline industry is intensely competitive and dynamic.
Our competitors include other major domestic airlines as well as foreign, regional and new entrant airlines, many 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 the actions of other carriers in many areas including pricing, scheduling, capacity and
promotions, which can have a substantial adverse impact not only on our revenues, but 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 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, potentially, further consolidation, and could continue to have an impact on our overall performance.
Additionally, as mergers and 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 acquire such assets could be harmed. In addition, as
carriers combine through traditional mergers or antitrust immunity grants, their route networks will grow and that growth will 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. 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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