US Airways to Seek Court Supervision to Complete Restructuring and Implement Transformation Plan

US Airways to Seek Court Supervision to Complete Restructuring
and Implement Transformation Plan
Flight Schedules and Customer Programs to Continue Uninterrupted




ARLINGTON, Va., Sept. 12  /PRNewswire-FirstCall/ -- US Airways Group, Inc.
(NASDAQ:UAIR) today announced that the Company and certain of its subsidiaries
filed voluntary petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code.  The Company said that today's action will provide the
nation's seventh-largest airline the opportunity to implement its
Transformation Plan built on lower costs, a simplified fare structure, and
expanded service in the eastern U.S., the Caribbean, Latin America and Europe.

"We have devoted the last six months to building and implementing a
Transformation Plan that leverages our strengths and allows us to compete
successfully in a changing airline industry," said US Airways President and
Chief Executive Officer Bruce R. Lakefield.  "Since we still lack the new labor
agreements that are needed for the Transformation Plan to succeed, we must
preserve the Company's cash resources that are required to implement the Plan.
We have made the difficult but necessary decision to complete this process with
the help of the Court."

Customers should notice no changes to flight operations or customer service
programs because of the filing.  The company intends to ask the Court to allow
it to assume all key agreements related to its Dividend Miles program and the
co-branded Bank of America/ Dividend Miles credit card.  In addition, employees
will be paid and their benefits will continue, and the operation of
usairways.com will be unaffected.  Vendors will be paid in ordinary course for
goods and services provided going forward.

US Airways faced Sept. 30 covenant tests relating to its Air Transportation
Stabilization Board (ATSB) loan.  Additionally, expiring financing agreements
with General Electric, Bombardier and Embraer, among others, required that the
key elements of its Transformation Plan -- including lower labor costs -- be
implemented by September 30.  With cash obligations quickly coming due and the
potential for defaults with some creditors imminent, the Chapter 11 filing
became necessary to preserve cash and allow the Court to oversee the Company's
continued restructuring, including reaching new labor agreements.  Despite
efforts undertaken for several months with its major work groups, the company
was unable to reach out-of-court negotiated agreements.

Lakefield said that US Airways has made tremendous strides since its emergence
from Chapter 11 in March 2003, and that the key elements of that original plan,
such as lower labor costs, the expansion of RJ flying, participation in the
Star Alliance, and lower aircraft lease and vendor costs, all contributed to US
Airways successfully securing a federal loan guarantee from the ATSB.  The
airline had already reduced annual operating expenses by almost $2 billion
during its 2002-2003 restructuring, but the dramatic growth of low-cost
carriers (LCCs), unabated fuel price increases and the public's demand for
lower, simpler fares requires that the Company do more to achieve an even more
competitive cost structure that is competitive to LCCs.

As a result of these external factors, US Airways' 2004 fuel costs are expected
to be approximately $300 million higher than envisioned in the confirmed plan
of reorganization, and mainline passenger revenues are expected to be $450
million lower than forecast, as overall industry unit revenue continues to
decline.

"We are facing the difficult choices and the pressures that every legacy
airline is going to be facing over the next several years," said Lakefield. "It
is no fun being first, and we take no pleasure in asking our employees to make
additional sacrifices.  However, we have come too far and accomplished too much
to simply stop the process and not succeed.  With our strong position on the
East Coast and our growing presence in Europe, the Caribbean and Latin America,
our dedicated employees, and more than 4 million active Dividend Miles members,
a restructured US Airways with low costs and low fares will be a dynamic
competitor."

The Company filed its petitions on Sunday afternoon in the U.S. Bankruptcy
Court for the Eastern District of Virginia in Alexandria.  The Company's
petitions listed assets of approximately $8.8 billion, including $2.5 billion
of Goodwill, and liabilities of approximately $8.7 billion.  The Court has
scheduled a hearing on the Company's first day motions for 10:30 a.m. in
Courtroom #1 at the Martin Bostetter, Jr. U.S. Courthouse.  Information on the
filing and related matters can be found at
http://www.transformingusairways.com/.

The Company has been operating with cash obtained from a $1 billion loan, $900
million of which was guaranteed by the ATSB.  The ATSB and the other lenders
(Retirement Systems of Alabama Holdings LLC (RSA) and Bank of America, N.A.)
have agreed to authorize US Airways continued use of those funds. Therefore, in
lieu of debtor-in-possession (DIP) financing, US Airways will have access to a
portion of $750 million in cash -- which serves as one component of the
collateral supporting the ATSB loan -- as working capital. The agreement
between US Airways, the ATSB and the other lenders will be presented to the
Court at Monday's hearing.  In following bankruptcy procedures, a final order
on operating cash would then be presented to the Court at a later date.

The Company's current cash position is approximately $1.45 billion in cash,
cash equivalents and short-term investments.  The outstanding portion of the
ATSB loan is $717.6 million.

"We have made it clear to union leaders and employees that we must have
competitive costs," said Lakefield.  "Labor cost reductions, including
participation by senior management, are no exception.  We are committed to
reaching new labor agreements consensually because that is always in the best
interest of all parties, but if not, we will need to consider the other
alternatives provided for under the law."

Lakefield added that while the employee sacrifices are difficult, they are
necessary in the changing airline industry, where low costs and low fares are
proving to be the most successful business formula.  "Our employees continue to
do an outstanding job for this airline and for our customers," said Lakefield. 
"We have spent a tremendous amount of time on this Transformation Plan because
we want our loyal and dedicated employees to continue to have a company and a
career at US Airways.  The alternative is to have these jobs exported to a new
generation of low-cost airlines, where any employees hired would start at
entry-level wages and without seniority," said Lakefield.

The Company's Transformation Plan is built on several aspects of proven success
in the airline industry, beyond the necessary lower labor costs. Those include:

   * Lower, simplified pricing and lower distribution costs.  US Airways has
     already taken steps to simplify its fares by introducing its GoFares
     pricing plan in many markets served from Philadelphia, Washington,
     D.C., and Fort Lauderdale, and has stated its intent to expand that
     pricing plan across its system in conjunction with achieving lower
     costs.  A redesigned Web site and more airport technology will also
     lower distribution costs, enhance customer service and improve airport
     processing.
   * Enhanced low-cost product offering.  US Airways customers will continue
     to benefit from many product offerings that are unique among low-cost
     carriers, including two-class service, international flights to Europe,
     the Caribbean, Latin America and Canada, service to airports that
     business travelers prefer, access to a global network via the Star
     Alliance, a premium frequent flyer program and competitive onboard
     service.
   * Network enhancements.  Leveraging its strong positions in the major
     markets of Boston, New York, Philadelphia and Washington, D.C., US
     Airways intends to use its airport slot and facilities assets to offer
     nonstop service to more major business and leisure destinations.
   * Lower operating costs.  In conjunction with more point-to-point flying,
     the airline will fly its fleet more hours per day as it decreases the
     time aircraft sit on the ground at hubs, waiting for connecting
     passengers.



US Airways is the nation's seventh-largest airline, serving nearly 200
communities in the U.S., Canada, Europe, the Caribbean and Latin America.  US
Airways, US Airways Shuttle and the US Airways Express partner carriers operate
over 3,300 flights per day.  For more information on US Airways flight
schedules and fares, contact US Airways online at usairways.com, or call US
Airways Reservations at 1-800-428-4322.

As part of the Company's timetable to emerge from Chapter 11 reorganization, US
Airways intends to file its disclosure statement and plan of reorganization by
the end of this year.

There has been no determination as to whether the Company's existing equity
securities will be preserved in any such plan of reorganization, and there can
be no assurance at this time as to what values, if any, will be ascribed to the
Company's existing common stock and/or other equity securities.  Accordingly,
the Company urges that the appropriate caution be exercised with respect to
existing and future investments in any of these securities.  Investors and
other interested parties can monitor the progress of the reorganization via the
Internet at http://www.transformingusairways.com/.  In addition, the investor
relations section of the Company's web site can be accessed under the "about US
Airways" section of http://www.usairways.com/.

Certain of the statements contained herein should be considered "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, which reflect the current views of US Airways Group (the
"Company") with respect to current events and financial performance. You can
identify these statements by forward-looking words such as "may," "will,"
"expect," "intend," "anticipate," "believe," "estimate," "plan," "could,"
"should," and "continue" or similar words. These forward-looking statements may
also use different phrases. Such forward-looking statements are and will be, as
the case may be, subject to many risks, uncertainties and factors relating to
the Company's operations and business environment which may cause the actual
results of the Company to be materially different from any future results,
express or implied, by such forward-looking statements. Factors that could
cause actual results to differ materially from these forward-looking statements
include, but are not limited to, the following: the ability of the Company to
continue as a going concern; the ability of the Company to obtain and maintain
any necessary financing for operations and other purposes, whether
debtor-in-possession financing or other financing; the Company's ability to
obtain court approval with respect to motions in the Chapter 11 proceeding
prosecuted by it from time to time; the ability of the Company to develop,
prosecute, confirm and consummate one or more plans of reorganization with
respect to the Chapter 11 proceedings; risks associated with third parties
seeking and obtaining court approval to terminate or shorten the exclusivity
period for the Company to propose and confirm one or more plans of
reorganization, for the appointment of a Chapter 11 trustee or to convert the
cases to Chapter 7 cases; the ability of the Company to obtain and maintain
normal terms with vendors and service providers; the Company's ability to
maintain contracts that are critical to its operations; the potential adverse
impact of the Chapter 11 proceedings on the Company's liquidity or results of
operations; the ability of the Company to operate pursuant to the terms of its
financing facilities (particularly the financial covenants); the ability of the
Company to fund and execute its Transformation Plan during the Chapter 11
proceedings and in the context of a plan of reorganization and thereafter; the
ability of the Company to attract, motivate and/or retain key executives and
associates; the ability of the Company to attract and retain customers; the
ability of the Company to maintain satisfactory labor relations; demand for
transportation in the markets in which the Company operates; economic
conditions; labor costs; financing availability and costs; aviation fuel costs;
security-related and insurance costs; competitive pressures on pricing
(particularly from lower-cost competitors) and on demand (particularly from
low-cost carriers and multi-carrier alliances); weather conditions; government
legislation and regulation; impact of the Iraqi war and the Iraqi occupation;
other acts of war or terrorism; and other risks and uncertainties listed from
time to time in the Company's reports to the SEC. There may be other factors
not identified above of which the Company is not currently aware that may
affect matters discussed in the forward-looking statements, and may also cause
actual results to differ materially from those discussed. The Company assumes
no obligation to update such estimates to reflect actual results, changes in
assumptions or changes in other factors affecting such estimates other than as
required by law.  Similarly, these and other factors, including the terms of
any reorganization plan ultimately confirmed, can affect the value of the
Company's various pre-petition liabilities, common stock and/or other equity
securities. Accordingly, the Company urges that the appropriate caution be
exercised with respect to existing and future investments in any of these
liabilities and/or securities.

Attention Broadcast Assignment Editors:

A satellite feed of US Airways President and CEO Bruce Lakefield commenting on
the filing is available at the following times:

  Sunday, Sept. 12, 2004, 7:00PM - 7:15PM ET (DEDICATED)
  Coordinates: C BAND: IA (C) 6 / Transponder 15 / AUDIO 6.2 & 6.8
  DL: 4000(V)

  Sunday, Sept. 12, 2004, 10:00PM - 10:15PM ET (DEDICATED)
  Coordinates: C BAND: IA (C) 6 / Transponder 15 / AUDIO 6.2 & 6.8
  DL: 4000(V)


DATASOURCE: US Airways



CONTACT:  US Airways, Media: [phone] (US), or [phone]

(UK-Europe), Investors: [phone] 



Web site:  http://www.usairways.com/

http://www.transformingusairways.com/ 

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