US Airways Group Reports Fourth Quarter Results

US Airways Group, Inc. today reported a net loss of $236 million for the fourth quarter 2004, compared to a $98 million net loss for the fourth quarter 2003. The fourth quarter 2004 pre-tax loss of $238 million compares to a pre-tax loss of $99 million for the same quarter in 2003. Excluding unusual items, the pre-tax loss for the fourth quarter 2004 was $214 million compared to $129 million in 2003 (see Note 5 for reconciliation).The sustained high price of fuel continues to have a negative impact on
cash flow when coupled with pressure on unit revenue. The cost of aviation
fuel per gallon, including taxes, for the fourth quarter 2004 was 130.84
cents (124.32 cents excluding taxes), up 49.1 percent from the same period
in 2003. Fuel hedging benefits, which partially mitigated the dramatic
increase in fuel price, improved results by $47 million, or 21.9 cents per
gallon.

“We have overcome what many claimed to be insurmountable obstacles, and
our dedicated employees deserve the credit for working with us,” said US
Airways President and Chief Executive Officer Bruce R. Lakefield.
“Although the industry still faces a number of challenges, we are actively
managing those issues and working to build an airline that can be
successful in an operating environment of lower revenue and sustained high
fuel costs.”

System passenger revenue per available seat mile (PRASM) for the fourth
quarter 2004 was 9.65 cents, down 10.9 percent compared to the fourth
quarter of 2003, reflecting the continuing downward pressure on fares
across the industry. Domestically, system PRASM fell 12.7 percent to 10.32
cents. System statistics encompass mainline, MidAtlantic Airways, wholly
owned airline subsidiaries of US Airways Group, Inc. and capacity
purchases from third parties operating regional jets as US Airways
Express. For US Airways mainline operations only, the PRASM of 8.71 cents
was down 10.8 percent. Fourth quarter 2003 passenger transportation
revenues included a $34.2 million favorable adjustment related to the air
traffic liability.

System available seat miles (ASMs) were up 4.1 percent, while mainline
ASMs increased 0.8 percent during the fourth quarter 2004. System revenue
passenger miles (RPMs) increased 5.1 percent, while mainline RPMs
increased 1.5 percent. The fourth quarter system load factor of 71.9
percent was up 0.7 percentage points year-over-year. The mainline
passenger load factor for the fourth quarter was up 0.5 percentage points
to 73.2 percent. For the fourth quarter 2004, US Airways Group Inc.‘s
system carried 14.1 million passengers, an increase of 4.4 percent, while
mainline operations carried 10.1 million passengers, a 2.3 percent
decrease compared to the same period of 2003. The fourth quarter 2004
yield for mainline operations of 11.90 cents decreased 11.4 percent from
the same period in 2003, while system yield was down 11.8 percent to 13.42
cents. As noted above, fourth quarter 2003 passenger transportation
revenues included a $34.2 million favorable adjustment related to the air
traffic liability.

Excluding the fourth quarter 2003 favorable adjustment, system PRASM
declined 9.0 percent, system domestic PRASM declined 10.9 percent, and
mainline PRASM declined 8.4 percent. Yield decline, excluding the
adjustment, was 9.8 percent for the system and 8.9 percent for mainline.

ADVERTISEMENT

Executive Vice President of Marketing and Planning Bruce Ashby said that
while US Airways fully expects continued expansion by low-cost, low-fare
airlines, especially in the East, the company is better positioned today
than ever before to compete aggressively. “We have made enormous progress
in reducing costs, leveraging our core strengths and building schedules
that meet the needs of the communities we serve, and now we are improving
operational reliability and enhancing technology and online capabilities.
As we meet various milestones and build momentum for our restructuring, we
have been pleased with the strong response to the marketing initiatives of
the past few weeks and the enthusiasm demonstrated by our customers,
corporate accounts and travel partners.”

The mainline cost per available seat mile (CASM), excluding fuel and
unusual items, of 8.79 cents for the fourth quarter 2004 was a 14 percent
decrease over the same period in 2003 (for a reconciliation of unit costs,
see Note 3 to the Selected Airline Operating and Financial Statistics).

Substantially all of the company’s unrestricted cash (includes cash, cash
equivalents and short-term investments) constitutes cash collateral under
the Air Transportation Stabilization Board (ATSB) loan agreement. As of
Dec. 31, 2004, $738 million of cash collateral was available for the
company’s use, subject to the limitations of the cash collateral agreement
with the ATSB and approved by the Bankruptcy Court, including stringent
minimum cash balances. The cash collateral agreement has been extended
through June 30, 2005. Additionally, on Dec. 31, 2004, restricted cash was
$626 million, for a total cash position of $1.36 billion. This compares to
a total cash position of $1.84 billion on Dec. 31, 2003, which included
$1.29 billion of unrestricted cash.

Other notable developments: * Ratified cost-savings agreements with all of
its labor groups, including non-unionized employees, totaling $1.1 billion
in annualized value. * Received ATSB extension to use cash proceeds from a
federally guaranteed loan through June 30, 2005, enabling the airline to
continue operations while it completes its restructuring and planned
emergence from Chapter 11 this summer. * Reached a comprehensive aircraft
leasing and financing, and engine services agreement with GE Capital
Aviation Services (GECAS) and GE Engine Services, to provide short-term
liquidity, reduce debt, lower aircraft ownership costs, and enhance engine
maintenance services and leases for new regional jets, while preserving
the vast majority of US Airways’ mainline fleet owned by GECAS. * Expect
to take delivery of 12 new regional jets by the end of February. These are
the first regional jets delivered to the company since US Airways filed
for bankruptcy in September 2004. US Airways wholly owned subsidiary PSA
and MidAtlantic division today operate 62 of the 50-seat, 70-seat and
72-seat regional jets. * Announced scheduling changes at Philadelphia
International Airport to improve operational reliability by reducing the
number of flights during peak hours, keeping fewer aircraft on the ground,
and spreading departure and arrival schedules to reduce congestion. US
Airways will add 49 flights in February, for a total of 496 daily nonstop
departures. * Announced six new routes (Atlanta, Cleveland, Dallas-Fort
Worth, Detroit, Houston Bush Intercontinental and Chicago O’Hare) from
Reagan Washington National Airport in February.

US Airways Group, Inc. and its domestic subsidiaries filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code
on Sept. 12, 2004, providing the company the opportunity to implement its
Transformation Plan built on lower costs, a simplified fare structure, and
expanded service.
——-