<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
USAir Group, Inc.
(Commission file number: 1-8444)
and
USAir, Inc.
(Commission file number: 1-8442)
(Exact names of registrants as specified in their charters)
Delaware USAir Group, Inc. 54-1194634
(State of incorporation USAir, Inc. 53-0218143
of both registrants) (I.R.S. Employer Identification Nos.)
USAir Group, Inc.
2345 Crystal Drive, Arlington, Virginia 22227
(Address of principal executive offices)
(703) 418-5306
(Registrant's telephone number, including area code)
USAir, Inc.
2345 Crystal Drive, Arlington, Virginia 22227
(Address of principal executive offices)
(703) 418-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrants (1) have filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrants were required to file
such reports), and (2) have been subject to such filing require-
ments for the past 90 days.
Yes x No
----- -----
At April 30, 1995, there were outstanding approximately
62,209,000 shares of common stock of USAir Group, Inc. and 1,000
shares of common stock of USAir, Inc.
The registrant USAir, Inc. meets the conditions set forth in
General Instructions H(1)(a) and (b) of Form 10-Q and is therefore
participating in the filing of this form with the reduced disclo-
sure format.
<PAGE>
USAir Group, Inc.
and
USAir, Inc.
Quarterly Report on Form 10-Q
Table of Contents
Part I. Financial Information Page
Item 1A. Financial Statements - USAir Group, Inc.
Condensed Consolidated Statements of Operations
- Three Months Ended March 31, 1995 and 1994 1
Condensed Consolidated Balance Sheets
- March 31, 1995 and December 31, 1994 2
Condensed Consolidated Statements of Cash Flows
- Three Months Ended March 31, 1995 and 1994 3
Notes to Condensed Consolidated Financial
Statements 4
Item 1B. Financial Statements - USAir, Inc.
Condensed Consolidated Statements of Operations
- Three Months Ended March 31, 1995 and 1994 5
Condensed Consolidated Balance Sheets
- March 31, 1995 and December 31, 1994 6
Condensed Consolidated Statements of Cash Flows
- Three Months Ended March 31, 1995 and 1994 7
Notes to Condensed Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9
Part II. Other Information
Item 1. Legal Proceedings 13
Item 3. Defaults Upon Senior Securities 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 21
<PAGE>
<TABLE>
Part I. Financial Information
Item 1A. Financial Statements
USAir Group, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1995 and 1994 (unaudited) (in thousands except per share amounts)
===========================================================================================================
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Operating Revenues
Passenger transportation $1,586,384 $1,528,063
Cargo and freight 40,871 41,992
Other 136,083 115,846
--------- ---------
Total operating revenues 1,763,338 1,685,901
Operating Expenses
Personnel costs 723,998 722,962
Aviation fuel 162,217 162,472
Commissions 142,672 141,099
Other rent and landing fees 105,677 112,162
Aircraft rent 109,701 114,036
Aircraft maintenance 87,661 105,518
Depreciation and amortization 87,714 85,930
Other, net 385,694 381,710
--------- ---------
Total operating expenses 1,805,334 1,825,889
--------- ---------
Operating income (loss) (41,996) (139,988)
Other Income (Expense)
Interest income 7,259 4,249
Interest expense (76,739) (68,669)
Interest capitalized 4,165 3,767
Other, net 10,428 3,986
--------- ---------
Other income (expense), net (54,887) (56,667)
--------- ---------
Income (loss) before taxes (96,883) (196,655)
Income tax provision (credit) - -
--------- ---------
Net income (loss) (96,883) (196,655)
Preferred dividend requirement (20,583) (19,220)
--------- ---------
Net income (loss) applicable to common stockholders $ (117,466) $ (215,875)
========= =========
Income (loss) per common share $ (1.91) $ (3.64)
========= =========
Shares used for computation (000) 61,627 59,274
See accompanying Notes to condensed consolidated financial statements.
</TABLE>
1
<PAGE>
<TABLE>
USAir Group, Inc.
Condensed Consolidated Balance Sheets
March 31, 1995 (unaudited) and December 31, 1994 (dollars in thousands except per share amounts)
==========================================================================================================
<CAPTION>
March 31, December 31,
1995 1994
ASSETS --------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 416,634 $ 429,538
Short-term investments 22,469 22,133
Receivables, net 444,471 324,539
Materials and supplies, net 249,801 258,664
Prepaid expenses and other 103,918 81,642
--------- ---------
Total current assets 1,237,293 1,116,516
Property and Equipment
Flight equipment 5,305,719 5,162,599
Ground property and equipment 1,061,906 1,059,027
Less accumulated depreciation and amortization (2,144,633) (2,085,499)
--------- ---------
4,222,992 4,136,127
Purchase deposits 137,097 195,701
--------- ---------
Property and equipment, net 4,360,089 4,331,828
Other Assets
Goodwill, net 522,601 526,615
Other intangibles, net 315,221 319,711
Other assets, net 514,650 513,372
--------- ---------
Total other assets 1,352,472 1,359,698
--------- ---------
$6,949,854 $6,808,042
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 137,734 $ 85,538
Accounts payable 405,822 318,323
Traffic balances payable and unused tickets 718,186 568,215
Accrued expenses 1,195,607 1,287,977
--------- ---------
Total current liabilities 2,457,349 2,260,053
Long-Term Debt, Net of Current Maturities 2,927,841 2,895,378
Deferred Credits and Other Liabilities
Deferred gains, net 408,024 413,961
Postretirement benefits other than pensions, non-current 976,375 958,956
Non-current benefit liabilities and other 408,862 417,878
--------- ---------
Total deferred credits and other liabilities 1,793,261 1,790,795
Commitments and Contingencies
Redeemable Cumulative Convertible Preferred Stock
Series A, 358,000 shares issued, no par value
(redemption value of $383,668 at March 31, 1995) 358,000 358,000
Series F, 30,000 shares issued, no par value
(redemption value of $312,404 at March 31, 1995) 300,000 300,000
Series T, 10,000 shares issued, no par value
(redemption value of $104,363 at March 31, 1995) 100,719 100,719
Stockholders' Equity (Deficit)
Series B cumulative convertible preferred stock, no par value,
4,263,000 depositary shares issued (liquidation preference
of $224,810 at March 31, 1995) 213,153 213,153
Common stock, par value $1 per share, authorized 150,000,000
shares, issued 62,082,000 and 61,088,000 shares, respectively 62,082 61,088
Paid-in capital 1,348,880 1,344,336
Retained earnings (deficit) (2,514,381) (2,417,498)
Deferred compensation (90,033) (90,965)
Adjustment for minimum pension liability (7,017) (7,017)
--------- ---------
Total stockholders' equity (deficit) (987,316) (896,903)
--------- ---------
$6,949,854 $6,808,042
========= =========
See accompanying Notes to condensed consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
USAir Group, Inc.
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 (unaudited) (in thousands)
==========================================================================================================
<CAPTION>
1995 1994
---- ----
(s> <C> <C>
Cash and cash equivalents beginning of period $ 429,538 $ 368,347
Cash flows from operating activities
Net income (loss) (96,883) (196,655)
Adjustments to reconcile net income (loss) to cash provided
by (used for) operating activities
Depreciation and amortization 87,714 85,930
Loss (gain) on disposition of property (1,558) 1,125
Other (9,063) (9,963)
Changes in certain assets and liabilities
Decrease (increase) in receivables (119,932) (145,200)
Decrease (increase) in materials, supplies, prepaid
expenses and intangible pension assets (11,879) (21,726)
Increase (decrease) in traffic balances payable and
unused tickets 149,971 188,046
Increase (decrease) in accounts payable and accrued expenses (18,213) 20,677
Increase (decrease) in postretirement benefits other than
pensions, non-current 17,174 19,292
-------- --------
Net cash provided by (used for) operating activities (2,669) (58,474)
Cash flows from investing activities
Aircraft acquisitions and purchase deposits, net (20,531) (19,069)
Additions to other property (18,327) (48,405)
Proceeds from disposition of property 36,928 713
Change in short-term investments - -
Change in restricted cash and investments 2,565 3,422
Other 177 279
-------- --------
Net cash provided by (used for) investing activities 812 (63,060)
Cash flows from financing activities
Issuance of debt - 172,156
Reduction of debt (16,556) (15,674)
Issuance of common stock 5,509 -
Sale of treasury stock - 1,903
Dividends paid - (19,198)
-------- --------
Net cash provided by (used for) financing activities (11,047) 139,187
-------- --------
Net increase (decrease) in cash and cash equivalents (12,904) 17,653
-------- --------
Cash and cash equivalents end of period $ 416,634 $ 386,000
======== ========
Noncash investing and financing activities
Issuance of debt for aircraft acquisitions, net $ 101,215 $ 62,786
======== ========
See accompanying Notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
USAir Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying condensed consolidated financial statements
include the accounts of USAir Group, Inc. ("USAir Group" or the
"Company") and its wholly-owned subsidiaries USAir, Inc. ("USAir"),
Piedmont Airlines, Inc., Jetstream International Airlines, Inc.,
Allegheny Airlines, Inc. (formerly Pennsylvania Commuter Airlines,
Inc.), USAir Leasing and Services, Inc., USAir Fuel Corporation and
Material Services Company, Inc.
Management believes that all adjustments necessary for a fair
statement of results have been included in the condensed consoli-
dated financial statements for the interim periods presented, which
are unaudited. All significant intercompany accounts and transac-
tions have been eliminated. Certain 1994 amounts have been
reclassified to conform with 1995 classifications.
These interim period condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
(2) Cash and Cash Equivalents and Short-Term Investments
At March 31, 1995, Cash and Cash Equivalents and Short-Term
Investments included approximately $30 million net proceeds from
aircraft sales in 1995 and approximately $27 million net proceeds
from the sale of certain aircraft and assets to Mesa Air Group,
Inc. (formerly Mesa Airlines, Inc.) in 1994 which the Company is
required to use to repurchase, defease or redeem outstanding debt
pursuant to a resolution of its board of directors.
4
<PAGE>
<TABLE>
Part I. Financial Information
Item 1B. Financial Statements
USAir, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1995 and 1994 (unaudited) (in thousands)
===========================================================================================================
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Operating Revenues
Passenger transportation $1,486,590 $1,427,676
Cargo and freight 40,071 41,230
Other 137,829 120,331
--------- ---------
Total operating revenues 1,664,490 1,589,237
Operating Expenses
Personnel costs 693,564 688,202
Aviation fuel 155,637 155,474
Commissions 134,924 133,239
Other rent and landing fees 102,004 108,848
Aircraft rent 100,831 102,898
Aircraft maintenance 74,927 89,029
Depreciation and amortization 83,659 79,841
Other, net 369,248 366,928
--------- ---------
Total operating expenses 1,714,794 1,724,459
--------- ---------
Operating income (loss) (50,304) (135,222)
Other Income (Expense)
Interest income 7,154 4,402
Interest expense (73,105) (68,131)
Interest capitalized 4,165 3,767
Other, net 10,266 5,132
--------- ---------
Other income (expense), net (51,520) (54,830)
--------- ---------
Income (loss) before taxes (101,824) (190,052)
Income tax provision (credit) - -
--------- ---------
Net income (loss) $ (101,824) $ (190,052)
========= =========
See accompanying Notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
USAir, Inc.
Condensed Consolidated Balance Sheets
March 31, 1995 (unaudited) and December 31, 1994 (dollars in thousands except per share amount)
===========================================================================================================
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 415,858 $ 428,925
Short-term investments 22,469 22,133
Receivables, net 445,774 326,012
Materials and supplies, net 231,112 238,481
Prepaid expenses and other 99,689 77,111
--------- ---------
Total current assets 1,214,902 1,092,662
Property and Equipment
Flight equipment 5,056,425 4,914,776
Ground property and equipment 1,043,004 1,040,329
Less accumulated depreciation and amortization (2,061,677) (2,006,041)
--------- ---------
4,037,752 3,949,064
Purchase deposits 137,097 195,701
--------- ---------
Property and equipment, net 4,174,849 4,144,765
Other Assets
Goodwill, net 522,601 526,615
Other intangibles, net 315,033 319,229
Other assets, net 592,869 592,689
--------- ---------
Total other assets 1,430,503 1,438,533
--------- ---------
$6,820,254 $6,675,960
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Current maturities of long-term debt $ 133,217 $ 80,714
Accounts payable 395,689 305,719
Payable to parent company 76,502 85,175
Traffic balances payable and unused tickets 752,647 591,154
Accrued expenses 1,170,915 1,255,098
--------- ---------
Total current liabilities 2,528,970 2,317,860
Long-Term Debt, Net of Current Maturities 2,882,960 2,849,488
Deferred Credits and Other Liabilities
Deferred gains, net 402,503 409,091
Postretirement benefits other than pensions, non-current 975,880 958,706
Non-current benefit liabilities and other 404,950 414,000
--------- ---------
Total deferred credits and other liabilities 1,783,333 1,781,797
Commitments and Contingencies
Stockholder's Equity (Deficit)
Common stock, par value $1 per share, authorized 1,000
shares, issued and outstanding 1,000 shares 1 1
Paid-in capital 2,416,131 2,416,131
Retained earnings (deficit) (2,784,124) (2,682,300)
Adjustment for minimum pension liability (7,017) (7,017)
--------- ---------
Total stockholder's equity (deficit) (375,009) (273,185)
--------- ---------
$6,820,254 $6,675,960
========= =========
See accompanying Notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
USAir, Inc.
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 (unaudited) (in thousands)
==========================================================================================================
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash and cash equivalents beginning of period $ 428,925 $ 367,835
Cash flows from operating activities
Net income (loss) (101,824) (190,052)
Adjustments to reconcile net income (loss) to cash
provided by (used for) operating activities
Depreciation and amortization 83,659 79,841
Loss (gain) on disposition of property (1,329) 1,156
Other (8,464) (9,326)
Changes in certain assets and liabilities
Decrease (increase) in receivables (119,762) (181,275)
Decrease (increase) in materials, supplies, prepaid
expenses and intangible pension assets (13,675) (23,380)
Increase (decrease) in traffic balances payable and
unused tickets 161,493 191,891
Increase (decrease) in accounts payable and accrued
expenses (16,590) 33,418
Increase (decrease) in postretirement benefits other
than pensions, non-current 17,174 19,292
-------- --------
Net cash provided by (used for) operating activities 682 (78,435)
Cash flows from investing activities
Aircraft acquisitions and purchase deposits, net (20,531) (19,069)
Additions to other property (17,337) (46,494)
Proceeds from disposition of property 36,617 659
Change in short-term investments - -
Change in restricted cash and investments 2,565 3,422
Other 177 279
-------- --------
Net cash provided by (used for) investing activities 1,491 (61,203)
Cash flows from financing activities
Issuance of debt - 172,156
Reduction of debt (15,240) (14,996)
-------- --------
Net cash provided by (used for) financing activities (15,240) 157,160
-------- --------
Net increase (decrease) in cash and cash equivalents (13,067) 17,522
-------- --------
Cash and cash equivalents end of period $ 415,858 $ 385,357
======== ========
Noncash investing and financing activities
Issuance of debt for aircraft acquisitions, net $ 101,215 $ 62,786
======== ========
Other property acquisitions - transfer from affiliated company $ - $ 7,925
======== ========
See accompanying Notes to condensed consolidated financial statements.
</TABLE>
7
<PAGE>
USAir, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying condensed consolidated financial statements
include the accounts of USAir, Inc. ("USAir") and its wholly-owned
subsidiary USAM Corp. USAir is a wholly-owned subsidiary of USAir
Group, Inc. ("USAir Group" or the "Company").
Management believes that all adjustments necessary for a fair
statement of results have been included in the condensed consoli-
dated financial statements for the interim periods presented, which
are unaudited. All significant intercompany accounts and transac-
tions have been eliminated. Certain 1994 amounts have been
reclassified to conform with 1995 classifications.
These interim period condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements contained in USAir's Annual Report on Form
10-K for the year ended December 31, 1994.
(2) Other
Please refer to Note 2 in USAir Group's "Notes to Condensed
Consolidated Financial Statements" on Page 4 of this report.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condi-
tion and Results of Operations
The following discussion relates to the financial results and
condition of USAir Group, Inc. (the "Company"). USAir, Inc.
("USAir") is the Company's principal subsidiary and accounts for
approximately 93% of its operating revenue. Therefore, the
following discussion is based primarily upon USAir's results of
operations and prospects.
The Company continued its efforts during the first quarter of
1995 to restructure its costs. It continued to negotiate with the
leadership of USAir's unionized employees regarding the $500
million annual savings in personnel costs it desires to achieve
through wage and benefit reductions, improved productivity and
other cost savings. On March 29, 1995, the Company and the
negotiating committee of the Air Line Pilots Association ("ALPA")
Master Executive Council signed an agreement in principle on wage
and other concessions in exchange for financial returns and
governance participation for USAir's organized labor groups and
other employees. ALPA represents USAir's pilots and the Master
Executive Council is ALPA's governing body. The agreement in
principle is subject to many significant conditions, including,
without limitation, approval by the USAir pilot Master Executive
Council, ratification by the pilots, negotiation and ratification
of acceptable agreements between USAir and its three other
organized labor groups, either the restructuring of the terms of
USAir Group's publicly held $437.50 Series B Cumulative Convertible
Preferred Stock, without par value (the "Series B Preferred
Stock"), or the continued deferral of dividends on this stock,
approval of the boards of directors of the Company and USAir and
the shareholders of the Company, and the execution of definitive
documentation. Various parties who would be affected by the
agreement in principle have expressed their unwillingness to
accept, or reservations about, certain terms of the tentative
agreement currently under discussion. Negotiations with respect to
this agreement are continuing.
On May 3, 1995, USAir Group and the International Association
of Machinists (the "IAM") reached agreements in principle on wage
and other concessions covering two groups of employees in exchange
for financial returns and governance participation. The IAM
represents USAir's approximately 8,000 mechanical and related
employees and USAir's approximately 6,500 fleet service employees.
The agreement covering the fleet service employees is the initial
agreement negotiated for this recently organized group of employ-
ees. The agreement involving the mechanical and related employees
modifies and extends the existing contract. The agreements in
principle are subject to many conditions similar to those affecting
the agreement in principle with the negotiating committee of the
ALPA Master Executive Council.
9
<PAGE>
USAir continues to negotiate with representatives of its two
other unions, the Association of Flight Attendants and the
Transport Workers Union. Significant issues related to the
agreements in principle with ALPA and the IAM and to possible
agreements with the other unions remain unresolved. It is
uncertain whether USAir will be successful in reaching agreements
with its other unions and whether or when any transactions with
ALPA, the IAM or the other unions will be consummated or what the
terms of any such transactions might be.
USAir has undertaken various initiatives which are expected
to result in at least $250 million to $300 million of savings
during 1995 from otherwise expected levels. In addition, USAir
plans to cut capacity throughout its system by approximately five
percent during the spring of 1995 and emphasize the strengths of
its hubs in Pittsburgh, Charlotte, Philadelphia and Baltimore, as
well as other major east coast urban centers. USAir expects that
this capacity reduction program will result in an additional $100
million of annual financial benefits which the Company will begin
to realize during the second half of 1995. In addition, the
Company is evaluating and considering the risks associated with
various strategic options, including further downsizing.
The recent "open skies" accord between the United States and
Canada provides that U.S. airlines will have limited new route
rights to Toronto for three years and open skies thereafter.
Pursuant to this aviation agreement, on May 1, 1995, the U.S.
Department of Transportation (the "DOT") granted to USAir the
temporary exemption authority to begin twice-daily roundtrip
nonstop service between Washington National Airport and Toronto
once a Canadian carrier enters that market. Air Canada plans to
initiate service on that route beginning June 19. USAir's
authority will be effective pending the DOT's determination in a
route proceeding (already instituted by the DOT) which U.S. carrier
will receive the final certification to operate the route.
Results of Operations
The Company recorded a net loss of $96.9 million in the first
quarter of 1995 compared with a net loss of $196.7 million in the
first quarter of 1994. This $99.8 million (50.7%) improvement is
primarily the result of increased revenue in the first quarter of
1995. The Company estimates that its revenue was adversely
affected by approximately $50 million in the first quarter of 1994
as a result of severe winter weather in the northeast United
States. The Company's improved results in the first quarter of
1995 reflect the relatively mild winter weather in 1995 as well as
the continued trend towards a more favorable balance between
capacity and demand in the domestic airline industry.
10
<PAGE>
Operating Revenue - The Company's Passenger Transportation
Revenue increased $58.3 million (3.8%) as a result of USAir's $58.9
million (4.1%) increase. USAir's passenger traffic, measured by
revenue passenger miles ("RPMs"), increased 8.2% over 1994 levels
largely due to improved weather conditions, and its yield (revenue
per RPM) decreased by 3.8% as a result of reduced fare levels in
response to low cost, low fare competition. USAir expects that its
yield for the year 1995 will be flat to slightly up over the 1994
level. USAir's capacity, measured by available seat miles
("ASMs"), increased by 7.0% and its capacity utilization (load
factor) increased by 0.7 percentage points over the first quarter
of 1994. The capacity increase is also largely influenced by the
improved weather conditions because a large number of flights were
canceled in 1994. The Company's Other Revenue improved by $20.2
million (17.5%) largely due to USAir's $17.5 million (14.5%)
improvement which includes an increase in frequent traveler program
participant fees and revenue from aircraft lease arrangements.
Expense - The Company's Aviation Fuel expense was approxi-
mately the same for the first quarter of 1995 as compared with the
first quarter of 1994. The cost of fuel per gallon decreased by
4.5% to 52.06 cents, but consumption increased by 4.9% to 299
million gallons. Jet fuel prices are subject to market changes in
response to the pricing of crude oil and the demand for other
refined petroleum products. Other Rent and Landing Fees expense
decreased $6.5 million (5.8%) as a result of USAir's $6.8 million
(6.3%) improvement which is the result of the timing of credits
received from certain large airport facilities which experienced
lower costs than expected in prior periods. Aircraft Maintenance
expense decreased $17.9 million (16.9%) as a result of USAir's
$14.1 million (15.8%) improvement and a $3.8 million improvement at
the Company's regional airline subsidiaries. USAir's improvement
is largely due to the reengineering of its maintenance division and
certain physical inventory expense adjustments which were recorded
in the first quarter of 1994. The Company's and USAir's Interest
Income improved by $3.0 million (70.8%) and $2.8 million (62.5%),
respectively, as a result of higher interest rates and higher
average cash levels in the first quarter of 1995. The Company's
Interest Expense increased $8.1 million (11.8%) as a result of
increased levels of debt at USAir and one of the Company's wholly-
owned regional airlines. The Company's Other, net is $6.4 million
better than 1994, primarily due to USAir's $5.1 million improve-
ment. USAir recorded improved results related to its computer
reservation system investments and a small gain on the sale of
excess aircraft parts in the first quarter of 1995.
Liquidity and Capital Resources
Cash used by operations was $2.7 million in the first quarter
of 1995. At March 31, 1995, cash and cash equivalents totaled
$416.6 million and short-term investments totaled $22.5 million,
11
<PAGE>
including approximately $30 million net proceeds from aircraft
sales in 1995 and approximately $27 million net proceeds from the
sale of certain aircraft and assets to Mesa Air Group, Inc.
(formerly Mesa Airlines, Inc.) in 1994 which the Company is
required to use to repurchase, defease or redeem outstanding debt
pursuant to a resolution of its board of directors. In addition,
USAir had $158.7 million which was deposited in trust accounts to
collateralize letters of credit or workers compensation policies
and classified as "Other Assets" at March 31, 1995.
Based on current projections, the Company expects to satisfy
its liquidity requirements for the remainder of 1995 through a
combination of cash from operations, cash on hand, and committed
aircraft financing. The Company currently expects that it will
have at least $400 million in unrestricted cash at year-end,
barring unforeseen circumstances. However, due to the coincidence
of certain scheduled semiannual, quarterly and monthly debt and
lease payments, substantial scheduled payments of approximately
$160 million are due in the month of January 1996. Depending on
market, economic and other factors, the Company's expectations of
liquidity are subject to change. In addition, the Company has
entered into agreements to sell 13 Boeing 737-300 aircraft during
1995 and has completed the sale of two of these aircraft during the
first quarter. Net proceeds from the remaining aircraft sales are
expected to total approximately $165 million. Pursuant to
resolutions of the boards of directors of the Company and USAir,
these net proceeds must be used to repurchase, defease or redeem
outstanding debt.
The Company and USAir are highly leveraged. In order to meet
debt service, lease rental payments and other obligations and to
finance daily operations, the Company and USAir require substantial
liquidity and working capital. In view of the Company's limited
liquidity and in relation to the size of USAir's operations and its
associated obligations, developments may occur that are beyond the
control of the Company and USAir which could have a material
adverse effect on the Company's prospects, liquidity and financial
condition, including intensified fare wars, substantial increases
in jet fuel prices, adverse weather conditions, negative public
perception regarding safety, and further incursions by low cost,
low fare carriers in USAir's markets. As discussed above, USAir
has implemented significant cost saving measures and is seeking, in
discussions with the leadership of its unionized employees,
substantial wage reductions, improved productivity and other cost
savings. Although the Company has reached agreements in principle
with ALPA and the IAM, these tentative agreements are subject to
various significant conditions and important issues related to
these agreements and possible agreements with the other unions
remain unresolved. If unforeseen adverse developments occur or if
timely agreements with the unions are not finalized and consummat-
ed, the Company and USAir may pursue other restructuring alterna-
tives.
12
<PAGE>
In February 1995, the National Transportation Safety Board
(the "NTSB") proposed new requirements for U.S. commercial aircraft
flight data recorders. The Federal Aviation Administration (the
"FAA") is expected to publish, by the end of May 1995, a Notice of
Proposed Rulemaking to require updated flight data recorders. The
NTSB's proposed minimum requirements would have to be met by
January 1, 1998 for most aircraft and would affect two-thirds of
the U.S. fleet. The proposal would require that upgrades on Boeing
737-series aircraft be completed by the end of 1995. USAir
currently estimates that its costs to comply with the proposed
requirement would be approximately $100 million. However, the
timing of expenditures and ultimate cost of the program cannot be
determined until the FAA completes its rulemaking.
Investing activities during the first quarter of 1995
included cash inflow of $36.9 million from disposition of assets
(primarily from two Boeing 737-300 aircraft which were sold),
offset by a $38.9 million cash outflow for the acquisition of
assets ($20.5 million cash payments related to new aircraft and
$18.4 million payments related to the purchase of rotables, hush
kits, and various ground support equipment). Net cash used by
financing activities was $11.0 million, which includes $16.6
million of scheduled debt payments, offset by $5.5 million proceeds
from the sale of the Company's common stock to an employee benefit
plan stock fund. In addition, the Company incurred debt of $101.2
million associated with the delivery of four new Boeing 757-200
aircraft and scheduled aircraft progress payments for future
deliveries during the first quarter of 1995. The $101.2 million is
reflected as non-cash activity in USAir Group's Condensed Consoli-
dated Statement of Cash Flows found in Item 1A of this report
because USAir incurred the related debt upon delivery of the
aircraft or payment of the progress payments. USAir has committed
financing for the remainder of its 1995 scheduled aircraft
deliveries.
At March 31, 1995, USAir Group's ratio of current assets to
current liabilities was 0.50 to 1 and the debt component of USAir
Group's capitalization structure was greater than 100% (also
greater than 100% if the three series of redeemable preferred stock
are considered to be debt) due to a net capital deficiency.
Part II. Other Information
Item 1. Legal Proceedings
On October 11, 1994, USAir, seven other carriers and Airline
Tariff Publishing Company ("APTCo") entered into a settlement
agreement with a group of State Attorneys General resolving claims
that the airlines used APTCo to signal and communicate carrier
pricing intentions and otherwise level price competition for travel
to and from numerous hub airports. The settlement entitles
13
<PAGE>
passengers traveling within the United States on state government
business to a 10% discount off the published fares of each of the
settling carriers and will be available for 18 months or until the
combined discount amount reaches $40 million. On May 10, 1995, a
U.S. federal district court judge approved the settlement. The
Company does not expect that this settlement will have a material
adverse effect on its financial condition or results of operations.
It is difficult to predict the amount of discounted state travel
that will occur on USAir. Thus, a dollar impact of the settlement
cannot be estimated.
In January 1995, a member of USAir's Frequent Traveler
Program ("FTP") filed a class action lawsuit in Illinois state
court against USAir alleging breach of contract relating to changes
made to USAir's FTP effective December 31, 1989. USAir was served
with notice of this lawsuit in May 1995. The lawsuit seeks
unspecified damages and an injunction against the objectionable
changes to USAir's FTP and any subsequent retroactive changes to
the FTP. USAir denies the allegations made in the lawsuit and
intends to vigorously defend itself. The ultimate resolution of
this lawsuit and its potential impact on the Company's financial
condition and results of operations cannot be predicted at this
time.
In May 1995, a number of U.S. air carriers, including USAir,
received Civil Investigative Demands ("CIDs") from the U.S.
Department of Justice relating to its investigation of a possible
agreement among these carriers to implement a cap on travel agent
commissions in February 1995. (A CID is a request for information
in the course of an antitrust investigation and does not constitute
the institution of a civil or criminal action.) The CID received
by USAir seeks the production of transcripts of depositions of any
USAir employees taken in connection with the private litigation
relating to the commission caps, together with annexed exhibits.
For information on certain additional pending legal proceed-
ings see Part I. Item 3. - "Legal Proceedings" in the combined
Annual Report of USAir Group and USAir on Form 10-K for the year
ended December 31, 1994.
Item 3. Defaults Upon Senior Securities
The Company is currently in a capital deficit position and
therefore, under Delaware law, is legally restricted from paying
dividends until its capital surplus becomes positive. The Company
deferred quarterly dividend payments on all outstanding series of
its preferred stock beginning with payments due September 30, 1994.
The outstanding issues of preferred stock are: 9 1/4% Series A
Cumulative Convertible Redeemable Preferred Stock ("Series A
Preferred Stock") owned by affiliates of Berkshire Hathaway, Inc.;
Series F Cumulative Convertible Senior Preferred Stock ("Series F
Preferred Stock") and Series T Cumulative Convertible Exchangeable
14
<PAGE>
Senior Preferred Stock ("Series T Preferred Stock") owned by an
affiliate of British Airways Plc; and Series B Cumulative Convert-
ible Preferred Stock ("Series B Preferred Stock") which is publicly
held.
The redemption value of the Series A Preferred Stock at
March 31, 1995 is $383.7 million (face amount of $358.0 million
plus deferred dividends and interest thereon of $25.7 million).
The redemption values of the Series F and T Preferred Stock at
March 31, 1995 are $312.4 million (face amount of $300.0 million
plus deferred dividends and interest thereon of $12.4 million) and
$104.4 million (face amount of $100.7 million plus deferred
dividends and interest thereon of $3.7 million), respectively. The
liquidation preference of the Series B Preferred Stock is $224.8
million (face amount of $213.2 million plus deferred dividends of
$11.6 million) at March 31, 1995. There can be no assurance when
or if preferred dividend payments will resume.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Designation Description
3.1 Restated Certificate of Incorporation of USAir Group
(incorporated by reference to Exhibit 3.1 to USAir
Group's Registration Statement on Form 8-B dated
January 27, 1983), including the Certificate of Amend-
ment dated May 13, 1987 (incorporated by reference to
Exhibit 3.1 to USAir Group's and USAir's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1987), the Certificate of Increase dated June 30, 1987
(incorporated by reference to Exhibit 3 to USAir
Group's and USAir's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1987), the Certificate of
Increase dated October 16, 1987 (incorporated by
reference to Exhibit 3.1 to USAir Group's and USAir's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987), the Certificate of Increase dated
August 7, 1989 (incorporated by reference to Exhibit
3.1 to USAir Group's Annual Report on Form 10-K for the
year ended December 31, 1989), the Certificate of
Increase dated April 9, 1992 (incorporated by reference
to Exhibit 3.1 to USAir Group's and USAir's Annual
Report on Form 10-K for the year ended December 31,
1992), the Certificate of Increase dated January 21,
1993 (incorporated by reference to USAir Group's and
USAir's Annual Report on Form 10-K for the year ended
December 31, 1992), and the Certificate of Amendment
dated May 26, 1993 (incorporated by reference to
Appendix II to USAir Group's Proxy Statement dated
April 26, 1993).
15
<PAGE>
3.2 By-Laws of USAir Group (incorporated by reference to
Exhibit 3.2 of USAir Group's and USAir's Annual Report
on Form 10-K for the year ended December 31, 1994).
3.3 Rights Agreement, dated as of July 29, 1989, as amended
and restated as of January 21, 1993, between USAir
Group and Chemical Bank, as Rights Agent (incorporated
by reference to Exhibit 28.4 to USAir Group's Current
Report on Form 8-K dated January 21, 1993).
3.4 Restated Certificate of Incorporation of USAir (in-
corporated by reference to Exhibit 3.1 to USAir's
Registration Statement on Form 8-B dated January 27,
1983).
3.5 By-Laws of USAir (incorporated by reference to Exhibit
3.5 of USAir Group's and USAir's Annual Report on Form
10-K for the year ended December 31, 1994).
4.1 Amended Certificate of Designation, Preferences, and
Rights of the Series D of Junior Preferred Stock of
USAir Group (incorporated by reference to Exhibit 4(c)
to USAir Group's Current Report on Form 8-K dated
August 11, 1989).
4.2 Certificate of Designation of Series A Cumulative
Convertible Preferred Stock of USAir Group (incorpo-
rated by reference to Exhibit 4(b) to USAir Group's
Current Report on Form 8-K dated August 11, 1989).
4.3 Certificate of Designation of Series B Cumulative
Convertible Preferred Stock of USAir Group (incorpo-
rated by reference to Exhibit 3.3 to Amendment No. 4 to
USAir Group's Registration Statement on Form S-3
(Registration No. 33-39540) dated May 17, 1991).
4.4 Agreement between USAir Group and Berkshire Hathaway
Inc. dated August 7, 1989 (incorporated by reference to
Exhibit 4(a) to USAir Group's Current Report on Form 8-
K dated August 11, 1989).
4.5 Certificate of Designation of Series F Cumulative
Convertible Senior Preferred Stock of USAir Group
(incorporated by reference to Exhibit 28.2 to USAir
Group's Current Report on Form 8-K dated January 21,
1993).
4.6 Form of Certificate of Designation of Series T-_
Cumulative Exchangeable Convertible Senior Preferred
Stock of USAir Group (incorporated by reference to
Appendix VII to USAir Group's Proxy Statement dated
April 26, 1993). Neither USAir Group nor USAir is
16
<PAGE>
filing any instrument (with the exception of holders of
exhibits 10.1(a-c)) defining the rights of holders of
long-term debt because the total amount of securities
authorized under each such instrument does not exceed
ten percent of the total assets of USAir. Copies of
such instruments will be furnished to the Securities
and Exchange Commission upon request.
10.1(a) Supplemental Agreement No. 16, dated July 19, 1990, to
Purchase Agreement No. 1102 between USAir and The
Boeing Company (incorporated by reference to Exhibit
10.2(a) to USAir Group's Annual Report on Form 10-K for
the year ended December 31, 1990).
10.1(b) Supplemental Agreement No. 17, dated November 28, 1990,
to Purchase Agreement No. 1102 between USAir and The
Boeing Company (incorporated by reference to Exhibit
10.2(b) to USAir Group's Annual Report on Form 10-K for
the year ended December 31, 1990).
10.1(c) Supplemental Agreement No. 18, dated December 23, 1991,
to Purchase Agreement No. 1102 between USAir and The
Boeing Company (incorporated by reference to Exhibit
10.2(c) to USAir Group's Annual Report on Form 10-K for
the year ended December 31, 1991).
10.2 Purchase Agreement No. 1725 dated December 23, 1991
between USAir and The Boeing Company (incorporated by
reference to Exhibit 10.3 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended Decem-
ber 31, 1991).
10.3 USAir, Inc. Executive Incentive Compensation Plan
(incorporated by reference to Exhibit 10.3 to USAir
Group's Annual Report on Form 10-K for the year ended
December 31, 1989).
10.4 USAir, Inc. Officers' Supplemental Benefit Plan (incor-
porated by reference to Exhibit 10.5 to USAir's Annual
Report on Form 10-K for the year ended December 31,
1980).
10.5 USAir, Inc. Supplementary Retirement Benefit Plan
(incorporated by reference to Exhibit 10.5 to USAir
Group's Annual Report on Form 10-K for the year ended
December 31, 1989).
10.6 USAir, Inc. Supplemental Executive Defined Contribution
Plan (incorporated by reference to Exhibit 10.6 to
USAir Group's and USAir's Annual Report on Form 10-K
for the year ended December 31, 1994).
17
<PAGE>
10.7 USAir Group's 1984 Stock Option and Stock Appreciation
Rights Plan (incorporated by reference to Exhibit A to
USAir Group's Proxy Statement dated March 30, 1984).
10.8 USAir Group's 1988 Stock Incentive Plan (incorporated
by reference to Exhibit 10.15 to USAir Group's Annual
Report on Form 10-K for the year ended December 31,
1987).
10.9 USAir Group's 1992 Stock Option Plan (incorporated by
reference to Exhibit A to USAir Group's Proxy Statement
dated March 30, 1992).
10.10 Employment Agreement between USAir and its Chief Execu-
tive Officer (incorporated by reference to Exhibit
10.10 to USAir Group's and USAir's Annual Report on
Form 10-K for the year ended December 31, 1994).
10.11 Employment Agreement between USAir and its President
and Chief Operating Officer (incorporated by reference
to Exhibit 10.11 to USAir Group's and USAir's Annual
Report on Form 10-K for the year ended December 31,
1994).
10.12 Employment Agreement between USAir and its Executive
Vice President-Marketing (incorporated by reference to
Exhibit 10.12 to USAir Group's and USAir's Annual
Report on Form 10-K for the year ended December 31,
1994).
10.13 Employment Agreement between USAir and its Executive
Vice President and General Counsel (incorporated by
reference to Exhibit 10.13 to USAir Group's and USAir's
Annual Report on Form 10-K for the year ended Decem-
ber 31, 1994).
10.14 Employment Agreement between USAir and its Senior Vice
President-Human Resources (incorporated by reference to
Exhibit 10.14 to USAir Group's and USAir's Annual
Report on Form 10-K for the year ended December 31,
1994).
10.15(a) Agreement between USAir and its President and Chief
Operating Officer providing supplemental retirement
benefits (incorporated by reference to Exhibit 10.15(a)
to USAir Group's and USAir's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.15(b) Agreement between USAir and its Executive Vice Presi-
dent-Marketing providing supplemental retirement
benefits (incorporated by reference to Exhibit 10.15(b)
18
<PAGE>
to USAir Group's and USAir's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.15(c) Agreement between USAir and its Executive Vice Presi-
dent and General Counsel providing supplemental retire-
ment benefits (incorporated by reference to Exhibit
10.15(c) to USAir Group's and USAir's Annual Report on
Form 10-K for the year ended December 31, 1994).
10.15(d) Agreement between USAir and its Senior Vice President-
Human Resources providing supplemental retirement
benefits (incorporated by reference to Exhibit 10.15(d)
to USAir Group's and USAir's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.16(a) Trust Agreement dated as of August 1, 1989 between
USAir Group and Wachovia Bank and Trust Company, N.A.,
as Trustee (incorporated by reference to Exhibit
10.10(a) to USAir Group's Annual Report on Form 10-K
for the year ended December 31, 1989).
10.16(b) Trust Agreement dated as of August 1, 1989 between
USAir and Wachovia Bank and Trust Company, N.A., as
Trustee (incorporated by reference to Exhibit 10.10(b)
to USAir Group's Annual Report on Form 10-K for the
year ended December 31, 1989).
10.17 Investment Agreement dated as of January 21, 1993
between USAir Group and British Airways Plc (incor-
porated by reference to Exhibit 28.1 to USAir Group's
and USAir's Current Report on Form 8-K filed on Janu-
ary 28, 1993, as amended by Amendment No. 1 on Form 8
filed on April 13, 1993).
10.17(a) Amendment dated as of February 21, 1994 to the Invest-
ment Agreement dated as of January 21, 1993 between
USAir Group and British Airways Plc (incorporated by
reference to Exhibit 10.13(a) to USAir Group's Annual
Report on Form 10-K for the year ended December 31,
1993).
11 Computation of Primary and Fully Diluted Earnings Per
Share for the three months ended March 31, 1995 and
1994 for USAir Group, Inc.
27(a) Financial Data Schedule for USAir Group, Inc.
27(b) Financial Date Schedule for USAir, Inc.
99 Airline Operating Statistics for the three months ended
March 31, 1995 and 1994 for USAir, Inc.
19
<PAGE>
B. Reports on Form 8-K
Date of Report Subject of Report
January 27, 1995 Press Release dated January 27, 1995
of USAir Group, Inc. and USAir, Inc.
with consolidated statements of oper-
ations for each company for the year
ended December 31, 1994.
April 13, 1995 The Company expects to end 1995 with
in excess of $400 million in cash,
barring unanticipated events.
April 19, 1995 Press Release dated April 19, 1995 of
USAir Group, Inc. and USAir, Inc. with
consolidated statements of operations
for each company for the three month
period ended March 31, 1995.
(this space intentionally left blank)
20
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
USAir Group, Inc.
(Registrant)
Date: May 12, 1995 By: /s/ Ann Greer-Rector
---------------------------
Ann Greer-Rector
Vice President & Controller
(Principal Accounting Officer)
USAir, Inc.
(Registrant)
Date: May 12, 1995 By: /s/ Ann Greer-Rector
---------------------------
Ann Greer-Rector
Vice President & Controller
(Principal Accounting Officer)
21
<PAGE>
<TABLE>
USAir Group, Inc.
Exhibit 11
Computation of Primary and Fully Diluted Earnings Per Share
(unaudited)
(in thousands except per share amounts)
<CAPTION>
Three Months Ended March 31,
-----------------------------------
1995 1994
---- ----
<S> <C> <C>
Adjustments to Net Income (Loss)
================================
Net income (loss) $ (96,883) $(196,655)
Preferred dividend requirement (20,583) (19,220)
-------- --------
Net income (loss) applicable to common stock and common
stock equivalents used for primary computation (117,466) (215,875)
Fully diluted adjustments
Assume conversion of preferred stock
Preferred dividend requirement 20,583 19,220
------- --------
Adjusted net income (loss) applicable to common stock
assuming full dilution $ (96,883) $(196,655)
======== ========
Adjustments to Common Shares Outstanding
========================================
Average number of shares of common stock 61,627 59,274
Primary Adjustments 1)
Assume exercise of options and common stock equivalents - -
-------- --------
Total average number of common and common equivalent
shares used for primary computation 61,627 59,274
======== ========
Average number of shares of common stock 61,627 59,274
Fully Diluted Adjustments 2)
Assume exercise of options 16 15
Assume conversion of preferred stock 39,156 39,156
-------- --------
Total average number of common shares assumed to be
outstanding after full conversion 100,799 98,445
======== ========
Income (Loss) Per Common Share
==============================
Primary income (loss) per common share 1) $ (1.91) $ (3.64)
======== ========
Fully diluted income (loss) per common share 2) $ (0.96) $ (2.00)
======== ========
1) The assumed exercise of options and common stock equivalents which are anti-dilutive are not included in the
computation and presentation of primary earnings per share.
2) The assumed exercise of options and conversion of preferred stock are anti-dilutive but are included in accordance with
Regulation S-K Item 601(b)(11).
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000701345
<NAME> USAIR GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 416,634
<SECURITIES> 22,469
<RECEIVABLES> 444,471<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 249,801
<CURRENT-ASSETS> 1,237,293
<PP&E> 6,504,722
<DEPRECIATION> 2,144,633
<TOTAL-ASSETS> 6,949,854
<CURRENT-LIABILITIES> 2,457,349
<BONDS> 2,927,841
<COMMON> 62,082
758,719
213,153
<OTHER-SE> (1,262,551)
<TOTAL-LIABILITY-AND-EQUITY> 6,949,854
<SALES> 0
<TOTAL-REVENUES> 1,763,338
<CGS> 0
<TOTAL-COSTS> 1,805,334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,739
<INCOME-PRETAX> (96,883)
<INCOME-TAX> 0
<INCOME-CONTINUING> (96,883)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (96,883)
<EPS-PRIMARY> (1.91)
<EPS-DILUTED> 0<F2>
<FN>
<F1>Receivables are presented net of allowances.
<F2>Fully diluted EPS is ant-dilutive and therefore not presented.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000714560
<NAME> USAIR, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 415,858
<SECURITIES> 22,469
<RECEIVABLES> 445,774<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 231,112
<CURRENT-ASSETS> 1,214,902
<PP&E> 6,236,526
<DEPRECIATION> 2,061,677
<TOTAL-ASSETS> 6,820,254
<CURRENT-LIABILITIES> 2,528,970
<BONDS> 2,882,960
<COMMON> 1
0
0
<OTHER-SE> (375,010)
<TOTAL-LIABILITY-AND-EQUITY> 6,820,254
<SALES> 0
<TOTAL-REVENUES> 1,664,490
<CGS> 0
<TOTAL-COSTS> 1,714,794
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,105
<INCOME-PRETAX> (101,824)
<INCOME-TAX> 0
<INCOME-CONTINUING> (101,824)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (101,824)
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1>Receivables are presented net of allowances.
<F2>EPS calculations are not relevant because USAir, Inc. is a wholly owned
subsidiary of USAir Group, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
USAir, Inc.
Exhibit 99
Airline Operating Statistics 1)
<CAPTION>
Three Months Ended March 31,
------------------------------
Increase
1995 1994 (Decrease)
---- ---- --------
<S> <C> <C> <C>
Revenue passengers (thousands) * 13,767 13,028 5.7 %
Total revenue passenger miles
("RPMs") (millions) 9,191 8,511 8.0 %
Revenue passenger miles
(millions) * 9,079 8,390 8.2 %
Total available seat miles
("ASMs") (millions) 15,334 14,347 6.9 %
Available seat miles
(millions) * 15,206 14,214 7.0 %
Passenger load factor 2) * 59.7 % 59.0 % 0.7 pts
Breakeven load factor 3) 4) 64.0 % 66.7 % (2.7)pts
Passenger revenue per ASM * 9.78 c 10.04 c (2.6)%
Total revenue per ASM 4) 10.75 c 10.98 c (2.1)%
Cost per ASM 4) 11.08 c 11.92 c (7.0)%
Yield (revenue per RPM) * 16.37 c 17.02 c (3.8)%
Cost of fuel per gallon 5) 52.06 c 54.51 c (4.5)%
Gallons of fuel consumed
(millions) 299 285 4.9 %
* = denotes scheduled service only.
c = cents
1) Statistics include free frequent travelers and the related miles flown.
2) Passenger load factor is the percentage of aircraft seating capacity that is actually utilized (RPMs/ASMs).
3) Breakeven load factor represents the percentage of aircraft seating capacity that must be utilized, based on fares in
effect during the period, for USAir to break even at the pretax income level.
4) Financial statistics exclude revenue and expense generated under the British Airways wet lease arrangement.
5) Cost includes the base cost of fuel and transportation charges.
</TABLE>
